Malaysia IPO volumes set to rise this year

KUALA LUMPUR • Fund raising from Malaysian initial public offerings is poised to rebound from the lowest in 16 years, led by a planned relisting of the local KFC operator, as receding uncertainty and commodity price gains help rekindle demand for riskier assets.

First-time share sales in Malaysia, South-east Asia's top destination for new listings less than five years ago, fell to US$305 million (S$441 million) last year, according to data compiled by Bloomberg.

The figure was the lowest level since 2000 and trailed other regional exchanges, including Singapore, which hosted US$1.7 billion of IPOs, and Thailand, where US$1.5 billion was raised, the data show.

While a volatile ringgit and slower economic growth hurt IPO volumes last year, fund raising could jump to at least US$2 billion this year, according to CIMB Group Holdings, Malaysia's top IPO arranger.

 QSR Brands (M) Holdings, the fast-food franchisee backed by CVC Capital Partners, is preparing a US$500 million share sale, people with knowledge of the matter said earlier. Property developer Eco World International said in October it plans to seek more than RM2 billion (S$642 million) in an IPO.

"Large IPOs planned for 2017 are expected to reignite investor interest," chief executive officer of CIMB's investment-banking arm Kong Sooi Lin, said in an interview. "If post-IPO performances listings are strong, we could see a rub-off effect where more private companies may decide to go public."

QSR Brands, which runs more than 730 KFC outlets and 390 Pizza Hut eateries in South-east Asia, is returning to the Malaysian stock market after being taken private in 2013 by CVC, Employees Provident Fund and Johor Corp. 

The company picked Citigroup, Credit Suisse Group and Malayan Banking to lead its IPO, people with knowledge of the matter said in October.

Malaysia, the only net oil exporter in Asia and the world's second-biggest palm oil producer, saw its currency weaken more than 4 per cent last year. Brent crude oil prices, which hit a decade low last January, rallied more than 50 per cent to about US$57 per barrel and could rise further this year as the Organisation of Petroleum Exporting Countries vows to trim output. Benchmark palm prices in Malaysia climbed 22 per cent last year.

The recovery could provide a boost to Serba Dinamik Holdings, an oil and gas services provider that is taking orders for an IPO of as much as RM584.1 million.

Edra Global Energy, Malaysia's second-biggest independent power producer, is considering a US$400 million first-time share sale as soon as this year, people familiar with the matter said in October.

Listings that have been delayed could return this year as confidence in the market increases, Mr Ramesh Manimekalanandan, head of Malaysia equity capital markets at Maybank Investment Bank, said in an interview. 

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on January 05, 2017, with the headline 'Malaysia IPO volumes set to rise this year'. Print Edition | Subscribe