Propel Global acquires 51% stake in O&G engineering firm for RM7.8m

PROPEL Global Bhd, provider of oil and gas (O&G) supporting services, had yesterday entered into a conditional share sale agreement to buy a 51% stake in Best Wide Engineering (M) Sdn Bhd for RM7.82 million.

Best Wide Engineering provides engineering and technical works for the O&G industry. Its shareholders and directors are Azizi Alias, Jasniazrin Shah Mohd Hata and Tan Siew Lee with 45.8%, 44.2% and 10% equity interest, respectively.

Propel Global is acquiring the 51% stake from Azizi, who is selling his entire equity interest, and Tan, who is selling 5.2% of his holdings.

As part of the share sale agreement, Propel Global has also entered into a put-and-call option agreement with Jasniazrin Shah and Tan that requires the company to purchase up to 49% of the remaining equity interest in Best Wide Engineering from them and Jasniazrin Shah and Tan will grant Propel Global the right during the call option period that requires them to sell up to 34% equity interest in Best Wide Engineering to the company.

Best Wide Engineering, which has 15 ongoing contracts with total unbilled contract value of RM21.8 million expected to be realised over the next three years, is guaranteeing a profit of RM2.4 million and RM2.6 million in net profit for the financial year ended Nov 30, 2022 (FY22), and FY23 respectively.

Best Wide Engineering reported revenue of RM18.6 million and net profit of RM178,000 for FY19; RM19 million revenue and RM395,000 net profit for FY20; and RM38.5 million revenue and RM2.3 million net profit for FY21. Currently, Best Wide Engineering has a tender book of RM41.3 million.

“The acquisition is in line with the group’s strategy to grow the O&G business through expanding our offerings and enhancing market presence as an O&G engineering services provider. Best Wide Engineering’s expertise and experience in engineering, procurement, construction and commissioning (EPCC) works complements the group’s existing O&G business,” group CEO Angeline Lee said in a statement yesterday.

Propel Global’s share price closed half a sen or 4%, higher yesterday at 13 sen, representing a market capitalisation of RM79 million. — TMR / pic source