Thursday 28 Mar 2024
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This article first appeared in Capital, The Edge Malaysia Weekly, on December 21 - 27, 2015.    

IF 2014 was a dismal year for initial public offerings (IPOs) on Bursa Malaysia, 2015 did not fare that much better in terms of funds raised.

A total of RM4.35 billion was raised during the year, which was an improvement from 2014’s RM3.94 billion, but just about half of the RM8.19 billion raised in 2013 and less than  a fifth of the RM22.9 billion seen in 2012, excluding exchange-traded funds.

The local bourse only saw 11 new entrants this year, shrinking from 14 last year and 17 in 2013.

The last time the local bourse saw numbers this low was over 25 years ago in 1988, when there were just six new listings. The dry stretch started in 1985 with only four listings, but things began to pick up again in 1989, with 13 new entrants.

The number of listings gradually grew, peaking at 92 in 1996 just before the Asian financial crisis hit the following year. But Bursa only felt the full force of the crisis in 1998 when new listings slumped to 28, compared with 88 in 1997.

Things have come full circle. Following the 2008 global financial meltdown, the local bourse saw IPOs fall to just 14 in 2009. The next year saw a recovery to 29 IPOs, which raked in RM19.9 billion in value.

Now, three years after 2012, the year of mega IPOs,  which saw major listings such as those of Felda Global Ventures Holdings Bhd, Astro Malaysia Holdings Bhd and IHH Healthcare Bhd, the market remains muted.

The three IPOs alone raised a massive RM22.67 billion, 99% of the entire market’s listings that year.

A lacklustre 2015 was also partly thanks to many postponed IPOs, including that of helicopter services provider Weststar Aviation Services Sdn Bhd, pegged at RM4.8 billion, Sime Darby Bhd’s automotive business (estimated at RM1.8 billion), and Iskandar Waterfront Holdings Sdn Bhd (RM930 million).

The saving grace this year was the listing of MMC Corp Bhd’s power-producing arm Malakoff Corp Bhd.

Originally slated for its second outing on the local bourse in 2014, Malakoff made its much awaited comeback in May. It had been privatised in 2007 by MMC Corp Bhd, which owned 22% of the independent power producer (IPP) then.

It was the largest IPO this year, raising RM2.74 billion — a welcome reprieve considering that it had to postpone the listing because of its power plant maintenance schedule.

Malakoff is the largest IPP in Southeast Asia with a total effective power generation capacity of over 6,000mw and effective water-production capacity of some 360,000 cum.

By 2020, it plans to raise its power generation capacity to 10,000mw and water production capacity by 15%.

Even so, the market did not seem to take too well to the IPO and the stock closed down 2.8% at RM1.75 on its maiden trading day.

By year-end, Malakoff proved to be among the worst performing IPOs, falling 8.6% since listing to close at RM1.60 on Dec 16 for a market capitalisation of RM8 billion.

Notable mentions

While no other IPO touched the billion-ringgit mark in 2015, Bursa saw three other notable listings: Sunway Construction Group Bhd (SunCon), Al-Salam Real Estate Investment Trust and food and beverage special purpose acquisition company (SPAC) Red Sena Bhd.

Red Sena is the first non-oil and gas SPAC to list on Bursa since the local bourse first introduced the model in 2009.

The F&B SPAC’s IPO came when Securities Commission Malaysia was tightening its rules on SPACs.

While this has been an ongoing process with three O&G SPACs on the market (Hibiscus Petroleum Bhd graduated to become an oil and gas company in April 2012 following the acquisition of its qualifying asset or QA), Red Sena has the longest moratorium on its shares yet.

The management’s lock-up period is three years after completing the acquisition of its QA and an accumulated profit after tax of RM107 million following the QA.

Red Sena is keeping risk low by targeting fairly established F&B businesses, with a focus on branded, processed and ready-to-consumer or ready-to-cook products, and probably not restaurants.

The SPAC made a weak debut, ending its maiden trading day at 37.5 sen, 25% lower than the issue price, for a market capitalisation of RM380 million. Since then, it has regained a marginal 2.7%, closing at 38.5 sen on Dec 16.

SunCon raised RM478 million in end-July, Al-Salam REIT RM252 million in end-September, and Red Sena RM400 million on Dec 10.

SunCon is Sunway Bhd’s construction arm, the product of the 2011 merger of Sunway Holdings Bhd and Sunway City Bhd. The IPO made SunCon a pure construction play, having carved out the property and quarry divisions.

Year to date, the company has won RM2.6 billion in jobs, exceeding management’s target of RM2.5 billion. It has an order book of RM4.3 billion.

The group made a weak debut, closing flat at RM1.20 on its first day of trading. But by year-end, the counter turned out to be one of Bursa’s top-performing IPOs this year, gaining 18.3% to close at RM1.42 on Dec 16 for a market capitalisation of RM1.8 billion.

Al-Salam REIT came to the market with an initial portfolio of 31 assets worth RM903 million. Some of its properties are Menara Komtar, @Mart Kempas and KFCH International College.

Its strategy is to hold a diversified portfolio, with almost 70% of assets presently in the retail sector and 30% in F&B.

It intends to double its asset base to RM2 billion in the next two to three years from RM903 million now.

Al-Salam REIT made a decent debut on the local bourse, closing 5% up at RM1.05 on its maiden trading day. This remains the REIT’s high for the year as the market has not looked upon it kindly since and the stock has shed 9% to close at 95.5 sen on Dec 16 for a market capitalisation of RM553.9 million.

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