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KUALA LUMPUR: The Securities Commission Malaysia (SC) expects funds raised via initial public offerings (IPOs) on Bursa Malaysia are likely to more than double to RM13 billion this year, up from RM5.9 billion raised in 2014.

“The expected capital raised through IPOs this year is anticipated to be in the range of RM10 billion to RM13 billion, higher than the amount raised last year,” chairman Datuk Ranjit Ajit Singh told a news conference on the release of the SC’s annual report 2014 yesterday.

Funds raised through IPOs fell for the second year last year to RM5.9 billion from RM8.1 billion in 2013 and RM22.1 billion in 2012.

Ranjit noted that the decline in IPO proceeds during the period was observed across Asean.

This year, the biggest IPOs are expected to come from the relisting of MMC Corp Bhd’s power unit Malakoff Corp Bhd, which is expected to raise about US$1 billion (RM3.65 billion), and Sunway Construction Group Bhd’s RM712.32 million listing.

There is also the wait on 1Malaysia Development Bhd’s power arm, Edra Global Energy Bhd’s US$3 billion IPO, which recently saw a setback as the documents for the listing were said to have been returned to its adviser and will be resubmitted to the SC at a later date.

Commenting on Edra’s listing, Ranjit said: “Any issuer that meets our eligibility criteria and fulfils the provisions for listings would be allowed access to public listings, but they must meet our requirements”.

Moving into 2015, the SC will undertake a review of primary market regulations regarding capital raising, disclosure and retail fund approvals.

“The review of the primary market regulation is all about creating efficiencies in our approval process, of which any regulator will do periodically,” said Ranjit.

Meanwhile, the corporate bond market’s fundraising figures are expected to hover around the RM85 billion range.

Last year, RM86 billion was raised in the corporate bond market, a decline from RM86.3 billion raised in 2013. In 2012, RM123.8 billion was raised in the corporate bond market.

“We anticipate the [2015] figures [raised] in the bond markets to be in the RM85 billion range, and therefore we anticipate that we will have a fourth year of in excess of RM90 billion raised with the capital markets on a stronger growth in the IPO segment,” said Ranjit.

In total, private debt securities and IPO fundraising activities exceeded the SC’s RM90 billion target for the third time last year at RM91.9 billion.

According to the SC’s annual report, the Malaysian capital market grew to RM2.76 trillion in 2014, which is equivalent to 2.6 times the size of the local economy.

The country has also affirmed its global leadership in the Islamic capital market, having grown at an average 12% per year over the last five years to RM1.59 trillion in 2014, which accounted for 58% of the capital market.

“By end-2014, 74% of Malaysian-listed companies were classified as syariah-compliant with market capitalisation of more than RM1 trillion. Malaysia also retained its position as the largest sukuk market in the world, accounting for 66% of global issuances,” it said.

The SC said that fund management continued to be the fastest growing market segment with assets under management (AUM) increasing 7.1% to RM630 billion, while Islamic AUM grew to RM111 billion from RM98 billion in 2013.

“We have a strong and diversified capital market, regulatory framework and institutions. We also believe that fundamentals are strong, therefore the story of sustainable growth in the capital markets will continue,” said the SC.

“Overall, we remain very vigilant against global market conditions. Our view is that our capital market remains resilient against any external volatility that have an impact on markets to ensure that the growth path continues,” said Ranjit.

 

This article first appeared in The Edge Financial Daily, on March 6, 2015.

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