As expected, a 2.153 billion share deal for Eco World International (EWI) priced at the very top end of its indicative range on Tuesday, raising M$2.58 billion ($580.7 million).
The deal received strong domestic support throughout its marketing period, with bankers reporting no price sensitivity in an order book that closed around nine times covered.
As a result, the deal was priced at M$1.20 per share, representing a 15.4% discount to the syndicate's M$1.42 estimated net asset value per share.
Bankers reported 60 lines in the book with a final allocation split of roughly 90% domestic and 10% international.
The top 10 investors (excluding the cornerstones) were allocated 85% of the deal and international investors were the main losers since they had accounted for about 30% of the institutional demand.
The IPO has been priced at roughly nine times forecast 2019 earnings, a relatively steep discount to its nearest comparable SP Setia, which is currently trading at 13 times forecast 2019 earnings.
The Malaysian market as a whole is currently valued at 16.4 times forward earnings, a shade above its 15.2 times five-year average. Foreign investors have largely shunned it, particularly following the election of Donald Trump and a rotation out of emerging market stocks last November.
Year-to-date the Kuala Lumpur Composite Index is up 6.88% and stands in the middle of the Asian pack when it comes to dollar-based returns. In the year-to-Friday, the MSCI Malaysian Index has risen 6.6%.
Local bankers said there were glimmers of a return. "Foreign investors have largely stayed away for the past 18 months," said one. "It’s still early days in terms of them coming back."
But EWI's deal was designed to appeal to domestic investors keen to get foreign currency exposure at a time when the Malaysian government is still advising state-linked groups to invest onshore.
It is backed by one of the country's most high profile property developers, Tan Sri Liew Kee Sin, the man who helped turn London's Battersea Power Station into a viable commercial project when he led SP Setia until 2014.
GuocoLand owns a 27% strategic stake in EWI and together the two have hinted they will partner up to re-develop the former's London hotel sites. The group's other assets include the West Village project in Sydney and three London-based developments in the Nine Elms Embassy District, Canary Wharf business district and the new London City Island Development.
Alongside GuocoLand, parent company Eco World Development will also hold a 27% stake. Alongside the strategic investors, retail is being allocated 17% and institutions 29%. The institutional tranche has a fairly even split between cornerstone and other investors.
The cornerstones comprise Employees Provident Fund, Permodalan Nasional Berhad and Kumpulan Wang Persaraan.
Listing is scheduled for April 3.
Joint global co-ordinators for the IPO were CIMB and Maybank, with Hong Leong Investment Bank and UOB KayHian on joint books, plus Alliance Investment Ban, AmInvestment Bank and RHB Investment Bank as domestic underwriters.