KUALA LUMPUR: The momentum seen in Malaysian initial public offerings (IPOs) last year is expected to carry through into 2014, with up to 15 listings in the pipeline, said RHB Investment Bank Bhd director and regional head of equity capital markets Gan Kim Khoon.

“I think the positive sentiment towards Malaysian IPOs which started around the second half of 2013 will carry through into the new year and will very likely extend its bullish run for possibly another 12 months,” he said in an email to The Edge Financial Daily.

Earlier, it was reported that at least nine IPOs worth over RM18 billion are expected this year. The major ones include that of Iskandar Waterfront Holdings (IWH), which could raise close to RM1 billion, and Medini Iskandar Malaysia, which is expected to raise RM2.5 billion.

The proposed listings also involve Boustead Plantations Bhd, 1Malaysia Development Bhd (1MDB), Malakoff Corp Bhd, and Icon Offshore Bhd.

IOI Properties Group Bhd, whose listing is tentatively slated for Jan 15, will be the first IPO of the year. It has been reported that the company is set to list with a market capitalisation of RM8.13 billion based on the reference price of RM2.51 per share.

Market observers noted that certain subsidiaries of Felda Global Ventures Holdings Bhd and the property arms of Sime Darby Bhd and Permodalan Nasional Bhd could potentially be looking to list as well.

According to JF Apex Securities Bhd, there has been market talk related to the listing of telecommunications towers, and an IPO of such assets could excite investors.

Last year saw 17 IPOs in Malaysia, which raised a total of RM8.24 billion.

Most of the IPOs performed well, with Berjaya Auto Bhd and Karex Bhd taking the lead in terms of year-to-date share price performance since their respective debut.

Berjaya Auto registered a 135.7% gain in its share price from its listing price of 70 sen on Nov 18, to close at RM1.65 on Dec 31, 2013. On its maiden day of trading, the stock closed at the highest premium (at 160%) as well compared to its peers.  

Karex Bhd came in second, registering a 125.4% gain in its share price from its listing price of RM1.85 on Nov 6, to close at RM4.17 on Dec 31.

Bursa Malaysia’s data shows that almost all of the listings had closed with a premium on the first day of trading against their listing prices, save for AirAsia X Bhd which remained unchanged and Cliq Energy Bhd which closed at a discount.

On Dec 31, four counters dipped against their listing prices. China Automobile Parts Holdings Ltd led the pack posting a 44.9% dip while Leon Fuat Bhd, AirAsia X Bhd and ABM Fujiya Bhd dipped 21.7%, 20.4% and 5% respectively.

Kanger International Bhd was the last to list on Dec 23 and was the only listing on the ACE market in 2013.

UMW Oil and Gas Corp Bhd was 2013’s biggest IPO, raising RM2.36 billion, followed by Westports Holdings Bhd which raised RM2.03 billion.

Other considerable listings included AirAsia X’s IPO, which raised RM987.7 million; MPHB Capital Bhd, which raised RM715 million; and CLIQ Energy Bhd, RM417 million.

The amount raised from the Malaysian IPO market could have been bigger had Malakoff Corp and Ranhill Energy and Resources Bhd been listed as planned. Malakoff and Ranhill had sought to raise RM3 billion and RM753 million respectively.  

“The momentum is there and I don’t foresee any major issues that can potentially disrupt this ‘train’,” said Gan in response to the IPO outlook in 2014.

RHB IB director and team head of corporate and investment banking services Yip Kit Weng also expects the IPO market to be “quite robust” in 2014, especially in the mid-cap space.

Areca Capital Sdn Bhd chief executive officer Danny Wong said it is now easier to raise money as everyone is bullish on the equity market. “But at the same time, as valuation is not cheap, investors are more cautious on the new IPOs,” he said.

Analysts also said that the performance of IPOs will depend on how the local equity market fares in the current year.

The FBM KLCI hit an all-time high of 1,872.52 on Dec 30, 2013, before closing the year slightly lower at 1,866.96.

New rules dampen SPAC listing

It is understood that certain special purpose acquisition companies (SPACs) are also eyeing to list in the coming year although tighter rules introduced by Securities Commission Malaysia may deter some of them from doing so.

The SC had on Dec 18 issued new practice notes on SPACs to enhance investor protection and tighten the rules on how the managements are rewarded.

“It is good that the new SC guidelines enhance the protection of minority shareholders. However, the lower discount to promoters [and additional protection] may deter more SPACs from seeking listing”, said an industry source.

“The concern is that there is too much industry concentration. Oil and gas is not necessarily bad but it projects the idea that SPACs are for certain industries,” he added.
To date, three SPACs have been listed on Bursa, namely Sona Petroleum Bhd, Cliq Energy Bhd and Hibiscus Petroleum Bhd – all of which are in the oil and gas sector.

Hibiscus was the first SPAC to be listed on Bursa and was reclassified under the industrial product category on June 11, 2012.

This article first appeared in The Edge Financial Daily, on January 02, 2014.