MIDF Research expects better market environment for IPOs

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KUALA LUMPUR (April 17): MIDF Research has maintained its FBM KLCI 2015 year-end target at 1,900 points and said the rising trend of capital raising via rights issuances has yet to show any signs of exhaustion.

In a strategy note today, the research house said purposes of issuance varied from operating to capex requirements.

It said the rising amount raised in the primary market via rights issuances in spite of various headwinds, which suggests no lack of latent investment capital and both market as well as macro optimisms.

MIDF Research said the initial public offering market had been on the decline during past three years, but it expects big-sized offerings to return this year from a lull in 2014.

“Going forward, we expect to see better market environment for initial offerings.

“However, in the interim, we believe that that while the equity benchmark index has regained its footing pursuant to the selloff in late last year, the broad market sentiment has not fully recovered and can be quite fickle.

“Hence the vendors of some prospective companies may decide to put off their listing plans until they see further improvement to this situation. In other words, they may lie in wait for better valuations,” it said.

MIDF Research said that based on latest updates, Malakoff Corporation Bhd was scheduled for listing in the coming month but the status of Edra Global Energy remained a question mark.

“The latter was reported to be floated with an offer size of RM10.8 billion that would rival Felda Gloval Ventures Holdings Bhd’s RM10.4 billion listing offer in 2012.

“Furthermore, it was also reported that Sime Darby Bhd is planning to list its motor subsidiary Sime Motors this year,” it said.