Petronas Chemicals Group Bhd., a unit of Malaysia’s state oil company, raised 12.8 billion ringgit ($4.1 billion) in the Southeast Asian nation’s biggest initial public offering after pricing shares at the top of its projected range, two people familiar with the matter said.
Shares were priced at 5.20 ringgit each for institutions with, said the people who couldn’t be named as the information was confidential. The petrochemicals company, owned by Petroliam Nasional Bhd., received orders for about 10 times the shares available, three other people with knowledge of the matter said.
The benchmark FTSE Bursa Malaysia KLCI Index rose 18 percent this year and reached a record on Nov. 10, as international investors purchased more of the nation’s stocks than at any time since at least 1995, according to data compiled by EPFR Global. The IPO values Petronas Chemicals at 38.8 billion ringgit, or 16.3 times profit, a 38 percent premium to the industry median.
“The environment is good for them,” said Katherine Schapiro, a San Francisco-based manager at Sentinel Asset Management Inc., which oversees $20 billion. “There’s a lot of demand for Asian stocks, especially big ones.”
Banks advising on the sale set an indicative price range of 4.50 ringgit to 5.20 ringgit per share for institutions, two people familiar with the matter said on Oct. 26. Individual investors will get a 3 percent discount, according to its prospectus.
Windfall Gain
Siti Azlina Bt A Latif, a spokeswoman for Petronas Chemicals, and Azman Ibrahim, a spokesman for Petronas, couldn’t immediately comment when contacted by telephone.
CIMB Group Holdings Bhd., Deutsche Bank AG and Morgan Stanley are managing the IPO, while Citigroup Inc. and UBS AG are co-bookrunners for the portion of the sale to institutional investors, according to the prospectus.
At the midpoint, the IPO would give government-owned Petronas a 184 percent return on its per-share stake valued at 1.71 ringgit, according to the prospectus and Bloomberg data.
The sale would eclipse the record $3.3 billion IPO from Kuala Lumpur-based Maxis Bhd., Malaysia’s biggest mobile-phone operator, last year and lift the nation’s initial offerings to an all-time high, the data show.
Petronas Chemicals, formed through the combination of more than 20 companies, will offer 2.48 billion shares for a 31 percent stake, the prospectus said. Petronas will get 72 percent of the proceeds, while the chemicals unit plans to use the remainder to build facilities and fund acquisitions.
Investment Plan
Petronas Chemicals intends to pay 50 percent of annual earnings as dividends to shareholders, the prospectus said.
Wan Zulkiflee Wan Ariffin, chairman of Petronas Chemicals, said on Nov. 2 the company may invest as much as $1 billion in an ammonia and urea plant in eastern Malaysia that will use the nation’s natural-gas reserves in that area. Malaysia is the world’s second-largest supplier of liquefied natural gas.
Petronas’s holding in Petronas Chemicals was valued at 12.47 billion ringgit, or 1.71 ringgit a share, at the time of the unit’s formation, the prospectus said. The midpoint IPO price would make Kuala Lumpur-based Petronas Chemicals one of Malaysia’s 10 largest publicly traded companies, the data show.
Not Cheap
Buyers would be paying about 16.3 times profits, based on the 1.19 billion ringgit the unit earned in the six months ended Sept. 30, the prospectus and data compiled by Bloomberg show. That compares with the median 11.8 times estimated earnings for 31 petrochemical companies globally, which gained an average of 47 percent so far this year.
Honam Petrochemical Corp., the Seoul-based maker of ethylene that is acquiring Malaysia’s Titan Chemicals Corp., trades at 8.1 times estimated profit. The shares have more than doubled in 2010.
“Petronas Chemicals is not coming to the market cheap,” said Christopher Wong, a Singapore-based senior investment manager for Asian equities at Aberdeen Asset Management Plc, which oversees $267 billion. “It’s quite encouraging for the Malaysian market to see appetite for risk.”
The valuation for Petronas Chemicals reflects a premium of 8.9 percent to shares in Malaysia. The 30 companies in the FTSE Bursa Malaysia KLCI Index trade at an average 14.97 times profit in the next 12 months after the gauge climbed to a record 1,528.01 on Nov. 10, data compiled by Bloomberg show.
The stock index exceeded the previous high in January 2008 as investors poured more than $355 million into Malaysian equity funds on a net basis in 2010, data compiled by Cambridge, Massachusetts-based EPFR Global show. Asian IPOs have attracted a record $142 billion this year, Bloomberg data show.
Capital Flow
“There’s a lot of money heading into Asia,” said Greg Lesko, who helps oversee $750 million at New York-based Deltec Asset Management. “For some of the larger funds, deals like this are opportunities to get reasonably well invested.”
The Employees Provident Fund and Kumpulan Wang Persaraan (Diperbadankan), two of Malaysia’s state-controlled retirement funds that oversee more than $150 billion, will buy 18 percent of the offering as strategic investors, the prospectus said.
The IPO of Petronas Chemicals is part of Prime Minister Najib Razak’s plan to attract more overseas investment by selling state-owned assets. The government eased rules last year that forced publicly traded companies to set aside 30 percent of their equity to ethnic Malays who form the majority of the population.
State Divestment
Malaysia Marine & Heavy Engineering Holdings Bhd., the Kuala Lumpur-based rig-building arm of Petronas’s MISC Bhd., raised about 2 billion ringgit last month in the nation’s biggest IPO so far this year. Institutions placed orders for 27 times the number of shares they were allocated.
The country’s finance ministry may also divest its holdings in Percetakan Nasional Malaysia Bhd., the state-owned printing company, CTRM Aero Composites Sdn., an aerospace components maker, and two biotechnology companies, Najib said in March.
Malaysia’s economy is projected to expand 6.7 percent in 2010, the fastest in six years and more than twice the pace of industrialized nations, according to the Washington-based International Monetary Fund.
“It’s a very significant step forward for Malaysia,” said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. “It’s one more indication of how the Asian countries are beginning to be the beacon of strength.”
Scan 20 Dec 2024
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Symbol TypeDateClose PriceVolume13 Day RSI
HARTA Overbought 12/20/2024 3.91 10695800 70.36
JFTECH Overbought 12/20/2024 0.805 2368100 76.5
PESTECH Overbough...
1 day ago
27 comments:
Don't buy petronas chemicals from the open Market. Dont support the shares as 90% of the IPO shares were allocated to Bumiputra. Non-bumi were left out. No 1malaysia.
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