The IPO market in Malaysia, which was a bright spot in Asia last year supported by ample domestic pension money, is expected to remain active in 2013 based on the number of deals in the pipeline.
One of the first sizable deals expected to hit the market this year is Malakoff Corp, the largest independent power producer in Malaysia. The company is seeking to raise about $1 billion from its initial public offering, which is expected in the second quarter, a source said yesterday. CIMB, Credit Suisse, J.P. Morgan and Maybank are joint global coordinators and bookrunners for the deal. Bank of America Merrill Lynch, Deutsche Bank, HSBC, Morgan Stanley, Nomura and RHB are joint bookrunners.
Last week, Ranhill Energy and Resources, a Malaysian conglomerate with focus on the energy and water sectors joined the queue of listing candidates by filing a draft prospectus with the Securities Commission Malaysia. It is being brought to the market by CIMB and Maybank.
Meanwhile, Westports Malaysia is seeking to raise about $500 million from its IPO, which is expected sometime after the general election, according to another source. Credit Suisse, Goldman Sachs and Maybank are joint global coordinators for that deal.
Sources say the election, which is expected in the next few months and should be a close one, could become a key factor in deciding the direction of the deal flow this year. While the new issuance market is expected to remain active in 2013, all Malaysian IPOs will feel some impact from the general election, the first source said. Market participants will keep a close eye both on the market performance between now and then, and the election outcome.
Indeed, the FBM KLCI index fell another 0.4% yesterday after losing 2.4% on Monday. The sell-off was triggered by rumours that Prime Minister Najib Razak was to set the election for as early as March, according to media reports.
It is hard to say right now whether the Malaysian IPO market will be like that of last year, but if the election has a stable outcome, there is a chance that there will be quite a lot of deals and Malaysia could surprise on the upside, the second source said.
But if the election ends up creating more confusion for the market, a lot of deals will likely drop away, the person added.
Last year, IHH Healthcare and Felda Global Ventures, a Malaysian government-owned agricultural commodities company, raised a combined $5.4 billion from their offerings and ended up as the fifth and sixth largest IPOs globally. The IPO volume in Malaysia reached $7.5 billion last year, a jump from $2.3 billion in 2011, according to Dealogic.
Malakoff
Malakoff will be offering up to 761 million shares through its IPO, of which 34.3% are existing shares and the remaining 65.7% are new shares, according to its draft prospectus.
Some 82.7% of the shares will be targeted towards institutional investors, while the remaining 17.3% will go towards the retail investors.
The company plans to use 90% of the proceeds to redeem its financing facilities, and the rest for future business expansion, working capital and general corporate purposes.
Malakoff has an effective power generation capacity of about 5,020 megawatt, which represents 22.5% of peninsular Malaysia’s total installed capacity, according to the draft prospectus. The company is also engaged in water production and power generation in the Middle East and North Africa.
Through its subsidiaries, it owns three combined cycle gas turbine (CCGT) power plants and one coal-fired thermal power plant in peninsular Malaysia. CCGT is a gas-fired electricity generation plant that uses waste heat to run a steam turbine.
Malaysia has a very favourable trend both in electricity consumption and GDP growth, which bodes well for independent power producers like Malakoff, the first source said. It is also able to take its expertise and fuel growth internationally, the person added.
Malakoff was incorporated in Malaysia in April 2006 as Nucleus Avenue (M), and assumed its current name a year later. MMC Corp acquired the entire business and undertaking, including all the assets, other than cash, and liabilities of Malakoff Bhd.
All the interests held by Malakoff Bhd were transferred to Malakoff Corp, and Malakoff Bhd was delisted in July 2007 following the completion of the acquisition, according to the draft prospectus.
In the year to December 31, 2011, Malakoff booked M$551 million ($180 million) in profit, up from M$217.3 million in 2010 and M$99.8 million in 2009, according to the draft prospectus.
Ranhill Energy and Resources
Ranhill’s IPO, which could raise between $200 million and $250 million, is expected to have a largely domestic focus, according to a source away from the deal.
Ranhill is a conglomerate with interests in two main sectors ― energy and environment. The energy business provides multidisciplinary engineering services to onshore and offshore oil and gas, refinery and petrochemical industries, according to the draft prospectus. It also owns and operates two 190 megawatt CCGT power plants in Sabah through its subsidiaries.
The environment division provides water supply services, operates water and wastewater treatment plans, and provides specialised management services and optimisation of water utility assets, it says.
Ranhill conducts its operations and provides its services primarily in Malaysia, and its international operations are centred in Asian markets, such as China, Thailand and Southeast Asia.
The company plans to use 70% of the proceeds to redeem Islamic notes and bonds and the rest to pay for acquisitions and an expansion of its water business in China.
According to the company, it was incorporated in August 2012 to facilitate the listing, with the principal activity being investment holding. All the companies within the group were previously part of the Ranhill Bhd (RB) group, which was listed in Malaysia in February 2001.
The group had logged losses and marginal profit after tax and minority interests for the fiscal years ending June 30, 2008 and 2010, respectively, according to the draft prospectus. The profit recorded by the RB group in 2009 was due to a one-off tax credit. It was delisted in November 2011.
