This article first appeared in The Edge Malaysia Weekly on December 25, 2017 - December 31, 2017

THE share price performance of Serba Dinamik Holdings Bhd this year has been stellar, which is remarkable considering it is an energy services group providing engineering solutions to the still-slow oil and gas sector as well as the power generation industry.

From the day it debuted on Bursa Malaysia’s Main Market on Feb 8, its share price has jumped 106.67% to RM3.10 per share as at Dec 21, from the initial public offering price of RM1.50.

That makes it the best IPO for 2017. Affin Hwang Investment Bank Bhd and RHB Investment Bank Bhd were the joint principal advisers and joint bookrunners. Both institutions were joint underwriters for the deal, together with AmInvestment Bank Bhd and Kenanga Investment Bank Bhd. RHB IB was also the managing underwriter.

Serba Dinamik’s business activities comprise operations and maintenance services (O&M), engineering, procurement, construction and commission (EPCC), and other products and services in O&G and power generation.

Its O&M business involves maintenance, repair and overhaul (MRO) of rotating equipment and inspection, as well as repair and maintenance (IRM) of static equipment and structures. The company is ranked third and fifth in Malaysia for MRO and IRM respectively in the O&G industry.

The IPO offered a base size of 389.4 million shares at RM1.50 per share, or RM581.4 million, representing 29.2% of the company’s enlarged share base, with an over-allotment option of 58.4 million shares or RM87.6 million.

Serba Dinamik raised RM671.7 million, valuing the group at RM2 billion. At the time, it was touted as the biggest IPO in Malaysia in 19 months in terms of value, before Eco World International Bhd’s listing in April.

The IPO proceeds were used primarily for capital expenditure, with the balance going for debt repayment and working capital.

The promoters of Serba Dinamik were Datuk Mohd Abdul Karim Abdullah, Datuk Awang Daud Awang Putera and Abdul Kadier Sahib, who collectively owned 83.93% of the group’s share base prior to the IPO.

Post-IPO, Serba Dinamik’s largest shareholder is Karim with a 25.27% stake followed by Kadier with 20.77%, while Daud Awang owns 11.7%. Kumpulan Wang Persaraan has a 5.78% stake as at Dec 20, and the Employees Provident Fund (EPF) holds 5.3%.

Serba Dinamik’s IPO is especially noteworthy since it was launched in a volatile global environment when equity markets were affected by China’s slowdown, Brexit and falling commodity prices, among other factors. Oil prices that remained depressed longer than expected made marketing the exercise even more challenging.

Despite the headwinds, the listing was successfully executed within the timeline, and priced at the top of the RM1.30 and RM1.50 per share indicative price range.

Since then, the stock has benefitted from rising oil prices over the last 12 months. The production quotas set by the Organisation of Petroleum Exporting Countries and Russia have boosted the crude oil price to more than US$60 per barrel, from US$45, in the past six months.

A month after its debut, the stock closed at RM1.75, up 17% over its final IPO price. By Nov 24, it had almost doubled to RM2.92.

Serba Dinamik’s slew of contract wins — totalling RM2.5 billion as at Nov 30 — which raised its outstanding order book to RM5.3 billion — was another major factor that boosted its share price. O&M jobs made up RM4 billion of total orders, with the remaining RM1.3 billion from EPCC contracts.

Another listing that deserves notable mention is the April 3 debut of Eco World International (EWI), which combined the joint expertise of Eco World Development Group Bhd — one of Malaysia’s largest publicly listed property developers — and Guoco Group, which is among Southeast Asia’s biggest corporations.

Guoco Group, through its unit GuocoLand Ltd, took up 27% stake in EWI to become a strategic investor in the international arm of Tan Sri Liew Kee Sin’s property development business. Guoco Group is controlled by Tan Sri Quek Leng Chan.

Analysts and investors believe the partnership between Liew and Quek will turn EWI into a formidable property development player in Asia. EWI has projects in Australia and the UK while GuocoLand is an established brand in Malaysia, Singapore, China and Vietnam.

EWI raised RM2.58 billion by issuing 2.153 billion shares or 89.7% of the group’s issued and paid-up capital, as well as a bonus issue of 960 million free warrants on the basis of two warrants for every five shares held by EWI shareholders.

EWI’s IPO was a landmark deal in both Malaysia and Southeast Asia at the time — it was the largest local IPO since June 2015 (before Lotte Chemical Titan Holdings Bhd’s IPO later in the year in July, which raised RM3.77 billion), and the largest for a property developer in the region since November 2010, according to Maybank Investment Bank Bhd.

Maybank IB, CIMB Investment Bank Bhd and Hong Leong Investment Bank (HLIB) were the joint principal advisers and joint managing underwriters for the deal. They also acted as joint bookrunners, together with UOB KayHian Securities (M) Sdn Bhd.

Maybank IB, CIMB IB, HLIB, Alliance Investment Bank Bhd, AmInvestment Bank and RHB IB were the joint underwriters.

Besides Guoco Group, the listing also saw Permodalan Nasional Bhd, Kumpulan Wang Persaraan and Employees Provident Fund becoming cornerstone investors of EWI, taking up an aggregate 212.4 million shares, or 8.9% of the enlarged share capital.

Securing the country’s top public fund managers anchored the transaction and provided significant momentum for the IPO. Within nine working days of the bookbuilding, it was 8.9 times oversubscribed.

“The offering was a resounding success, with the institutional tranche circa 9 times covered at the top end with no sensitivity across the price range, while demand for the retail tranche available to Malaysian public was circa 9 times oversubscribed,” says Maybank IB.

After the IPO, EcoWorld remains the largest shareholder of EWI with a 30.28% stake while Liew owns a direct stake of 10.27%.

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