KUALA LUMPUR, Feb 29 — Capital A Bhd shares rose this morning after the company finalised an agreement with Aetherium Acquisition Corp, a special purpose acquisition company (SPAC), to list Capital A International (CAPI) in the United States (US) public markets.

At 10.09am, the counter increased 1.0 sen to 72.5 sen with 6.38 million shares traded.

Yesterday, the company said under the terms of the proposed transaction, CAPI will combine with Aetherium and become a publicly traded entity.

The transaction will reflect an estimated pro forma enterprise value of US$1.15 billion for CAPI.

In a note today, Hong Leong Investment Bank Bhd (HLIB) is overall positive with the announcement as Capital A will be able to reduce its current large negative equity position (-RM8.4 billion as at the third quarter of 2023 (3Q2023) and is expected to improve in the 4Q2023.

"Capital A will be able to realise the underappreciated value of the group’s business with the listing exercise, and we expect more of such exercises to be undertaken for investors to fully appreciate the group’s embedded value.

"Shareholders of Capital A will also benefit through a distribution-in-specie, allowing its shareholders to directly own shares in CAPI.

"The valuation of CAPI at RM5.44 billion is already higher than Capital A’s current market capitalisation of RM3 billion,” it said.

Hong Leong Investment Bank expects a similar exercise to be done for Capital A’s aviation business segment with the merging with AAX in the near term, as the next part of the group’s PN17 regularisation plan.

Hence, the research house is maintaining a ‘buy’ call on the company with an unchanged target price of RM1.40 per share. — Bernama