Malaysian IPOs expecting second-half boom

May 29, 2018
Pent-up demand for IPOs could result in value high in 2018

IPOs in Malaysia are set to thrive in the second half of this year after the smooth transition of political power following a shock election outcome, which will help calm investors, according to a leading regional banker.

Issuers were hesitant before and shortly following Malaysia’s May 9 national election, but there is now a significant number of IPOs set to go to the market in the second half of 2018, says Maybank Kim Eng regional head of equity capital markets, Ramesh Manimekalanandan in a statement.

‘Given the IPO pipeline, it is possible that the total value in 2018 will exceed the amount raised in 2017,’ Manimekalanandan says.

‘Investors have not had the opportunity to invest into a major IPO since mid-2017,’ he adds. ‘We expect pent-up demand for the IPOs which do come to market.’

Among the companies looking at an IPO this year is Johor Corporation, which is planning to list its quick-service restaurant business by November, in a deal that could raise 2 bn ringgit ($500 mn).

Semiconductor firm Mi Equipment Holdings is set to launch an IPO prospectus next month to raise 200 mn ringgit.

So far this year, Malaysian companies have raised 250 mn ringgit through IPOs.

The Securities Commission Malaysia now says it expects companies to raise about 8 bn ringgit through IPOs this year – a significant fillip.

Political and financial uncertainty abound after the Alliance of Hope coalition swept to power to end a 61-year uninterrupted rule of the National Front.

The newly-elected Prime Minister Mahathir Mohamad quickly took control by naming key ministers to the federal cabinet.

To help his inexperienced coalition govern, 92-year-old Mahathir has also formed a temporary special economic advisory council that includes former central bank governor Zeti Akhtar Aziz.

Large IPOs have been erratic in Malaysia since 2012 when state-run planter Felda Global Ventures Holdings raised $3.1 bn. IHH Healthcare also raised $2 bn that year, followed by cable-TV operator Astro Malaysia, which raised $1.5 bn.

 

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