THE year has not been all that great for oil and gas companies, especially with the recent plunge in global oil prices.

But before this slump, SapuraKencana Petroleum Bhd (SKP) had seen successful placements of its shares worth a whopping RM1.81 billion this year — two secondary placements, one in February and the other in April.

The first placement was worth RM818.4 million and was conducted by Khasera Baru Sdn Bhd — the private vehicle of Tan Sri Mokhzani Mahathir.

Through this placement, Khasera Baru had divested 190.32 million shares or a 3.2% stake in SKP, which subsequently brought down its holding to 10.1%. The shares were priced at RM4.30 apiece, a 2.3% discount to SKP’s closing price on the launch date on Feb 18.

“The block was launched and covered during the noon trading break, and was priced at RM4.30 or a 3.8% discount to the preceding day volume weighted average price of RM4.4669,” notes its sole book runner, CIMB Investment Bank Bhd. It says SKP’s share price had remained stable during the afternoon trading session to close at RM4.40 that day.

It adds that the deal was fully pre-anchored by a tight group of high-quality investors, including government-linked companies, insurance funds and domestic funds. A total of 89.3% of investors were domestic government funds, and the rest, long-only investors.

Then on April 9, SKP saw another secondary placement for the year, involving some 230 million of its shares or a 3.8% stake by substantial shareholder Seadrill Ltd. The deal, which was priced at RM4.30 per share, was worth RM989 million and was Southeast Asia’s largest oil and gas secondary placement since 2013.

“The secondary placement via an accelerated book building was launched with a base deal of 180 million shares, and was fully upsized to 230 million shares after receiving strong investor demand with the book (base deal) covered almost 1.5 times,” says Maybank Investment Bank, which was the sole placement agent for the deal.

The fixed offer price of RM4.30 represented a tight discount of 3.4% to SKP’s closing share price on the launch date on April 9, and was at 17.4 times SKP’s consensus forecast price-earnings ratio for the financial year ending 2015.

Nevertheless, SKP had then traded sideways until end-September when it began descending in tandem with global oil prices. The stock closed at a 52-week low of RM2.10 last Tuesday, translating into a more than 50% loss since the beginning of the year.

The placement of the 3.8% stake has pared down Seadrill’s stake in SKP to 8.2%. To reiterate, the investors for the placement were anchored by domestic institutional funds at 89% of the book, whereby demand was mostly seen from long-only funds (84%), says Maybank. The rest came from hedge funds (8%) and high-net-worth individuals (8%).

“The allocation tilt was 92% domestic investors and 8% foreign investors. The top five key institutional funds made up over 80% of the total allocation. Long-only investors represented about 90% of the allocation,” says Maybank.

This placement followed a primary placement of RM1.64 billion last year by SKP. It used a portion of the proceeds to buy Seadrill’s tender rig business for US$2.9 billion — making  deferred cash payments to Seadrill, which amounted to US$187 million, while it satisfied the balance via a bridging loan facility.

This article first appeared in The Edge Malaysia Weekly, on 22 - 28 December 2014.

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