Khazanah raises $133 million from Tenaga block trade

The deal comes less than a week after the Malaysian investment company exited AIA and is seen as part of a long-term plan to gradually reduce its holdings in a number of Malaysian companies.

With little more than two weeks left of the year, Khazanah Nasional last night raised another M$406.8 million ($133 million) towards its coffers by trimming its stake ever so slightly in Malaysia’s leading power company, Tenaga Nasional.

The state-owned Malaysian investment company has been monetising parts of its holdings in several portfolio companies this year, including two more trades in the past couple of weeks. The biggest of those was the $356 million sell-down of in AIA, which marked Khazanah’s exit from the Hong Kong-listed life insurer. Two weeks ago it also sold an 8.8% stake in Malaysia Airports, raising $190 million.  

Earlier in the year it exited India’s Yes Bank and oversaw the IPOs of IHH Healthcare and Astro.

The Tenaga sale comes as the defensive stock has risen 17.3% in the past year, outperforming the 7% gain in the broader Malaysian market. Tenaga was also trading within 3% of its 2012 high of M$7.13 that it hit in early October.

The deal was launched with a base size of 50 million shares plus an option to sell an additional 10 million shares in case of demand. The latter turned out to be no issue and the deal was upsize in full to 60 million shares, accounting for approximately 1.1% of the share capital.

The shares were offered in a narrow price range of M$6.75 to M$6.80, which translated into a discount of 1.7% to 2.5% versus yesterday’s close of M$6.92.

According to sources, the deal attracted a lot of interest and when the order books closed after one-and-a-half hours it was multiple times subscribed with hardly any price sensitivity. However, Khazanah has a habit of leaving a bit on the table for investors in recognition of their support and last night was no exception (although as noted, the price range was quite narrow to begin with). Still, the price was fixed just above the mid-point at M$6.78% for a 2% discount.

The share price has been edging lower in the past three sessions, however, and the discount to the five-day volume-weighted average price (VWAP) was a slightly wider 2.9%.

The demand was said to be heavily skewed towards long-only investors and split roughly 50-50 between local and international accounts. Between 40 and 50 investors came into the transaction, sources estimated.

One reason for the enthusiastic response may be that investors participating in the placement will be entitled to receive a dividend of M$0.15 per share that is due later this month (the stock goes ex-dividend on December 17). Tenaga is also a low-volatility stock, making the power producer and distributor a popular play at times of market uncertainty.

Khazanah is the largest shareholder in Tenaga with a 35% stake before last night’s trade. But since the sale accounts for just 1.1% of the share capital, investors are unlikely to view the monetisation as a negative. In fact, Khazanah’s long-term plan to gradually reduce its stake in a number of Malaysian companies is partly driven by a desire to increase the free-float and liquidity in these stocks.

The rest of Khazanah’s shares in Tenaga will be locked up for three months.

CIMB and Deutsche Bank acted as joint bookrunners.

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