11 October 2012

Malaysia is a hotbed for large IPOs

Investor interest in the sale of shares in the traditional Asian financial centres of Hong Kong and Singapore may be waning, but Malaysia’s initial public offering (IPO) market has bucked the trend, proving to be a hotbed for large listings and a bright spot in an otherwise lacklustre sector.

Cable television operator Astro Malaysia is the most recent company heading to the Southeast Asian stock market, launching one of the country’s largest flotations this year after pricing its stock offering at the top end of its price range to raise money for general working capital and to repay debt.

The business’ debut has attracted a number of foreign and domestic cornerstone investors, including US hedge fund Och-Ziff Capital Management and state-run asset manager Permodalan Nasional. Udhay Furtado, head of Goldman Sachs South East Asia Equity Capital Markets told the Wall Street Journal that a lot of liquidity driving the Malaysian IPO market is domestic and this is not necessarily the case in other Asian regions.

The broadcaster’s USD 1,500 million-debut is the country’s third largest and one of the world’s top ten by value in 2012, according to Zephyr, the M&A database. It has also pushed the value of IPOs from domestic companies to almost USD 7,000 million for the year-to-date 2012, the highest amount companies have raised in Malaysia through listings since 2010, when Petronas Chemicals Group floated in a deal worth USD 4,105 million.

Astro is a consumer media entertainment firm which is partially owned by the domestic telecom magnate Ananda Krishnan and a state investment vehicle. Its market debut, slated for 19th October, comes on the heels of a USD 3,300 million share sale in June by state-run palm oil producer Felda Global Ventures Holdings, and a domestic and overseas listing in August by hospital operator IHH Healthcare worth USD 2,100 million.

Malaysia’s position as a leading Asian destination for IPOs is by no means over, after all the Southeast Asian independent power production giant Malakoff, which counts MMC Corp as a controlling shareholder with 51 per cent, is planning to list next year in a deal worth as much as USD 1,000 million.

However, it should be noted that the country’s completed IPOs have been helped along by the post-offering performances of other global high-profile deals, namely 2012’s largest offering to date by Facebook, and Japan Airlines, was which Asia’s largest listing and the second biggest worldwide so far this year. Facebook shares have sunk by 45 per cent since the company went public in May while JAL’s shares were down at the end of September from their offer price over the increasingly cloudy global outlook for airlines and heightened tensions with China.

© Zephyr