<article>Malaysia’s initial public offering (IPO) market is looking buoyant for next year &#8211; with mega listings and special purpose acquisition companies (SPACs) joining the line up to go public in 2015.</article>

Malaysia’s initial public offering (IPO) market is looking buoyant for next year &#8211; with mega listings and special purpose acquisition companies (SPACs) joining the line up to go public in 2015.
The estimated value of funds that about 10 major IPOs, are expected to raise in 2015, is upwards of $6.64 billion; more than four times the amount raised through IPOs in the current year.
<a href="http://www.rhbinvest.com/" target="_blank">RHB Investment Bank</a> director and regional head of equity capital markets Gan Kim Khoon says that both the number of listings and the funds raised (in the market),  will top the numbers from 2014. “2015 will be much better(for IPOs), compared to 2014. There are more IPOs and a few of them are mega listings,” he explained, noting that the IPO market value in 2015 is likely be surpass the funds raised in either 2014 or 2013.
Mega listings like <a href="http://www.1mdb.com.my/" target="_blank">1Malaysia Development Bhd Energy Bhd (1MDB Energy)</a>, which is <a href="http://www.dealstreetasia.com/stories/malaysias-1mdb-plans-3b-feb-ipo/" target="_blank">expected to raise $3 billion</a>, the <a href="http://www.dealstreetasia.com/stories/malakoff-relisting-may-hit-1-5b-assets-expanded/" target="_blank">$1 billion</a> <a href="http://www.malakoff.com.my/" target="_blank">Malakoff Corp Bhd</a> IPO and <a href="http://www.iskandarwaterfront.com/" target="_blank">Iskandar Waterfront Holdings Bhd (IWH)</a> that is expected to raise $300 million &#8211; are expected to make it to the market next year.
<figure id="attachment_1767" aria-describedby="caption-attachment-1767" style="width: 550px" class="wp-caption alignnone"><a href="http://www.dealstreetasia.com/wp-content/uploads/2014/12/Malaysia_IPO_2015_data.jpg"><img loading="lazy" decoding="async" class="wp-image-1767 size-full" src="http://www.dealstreetasia.com/wp-content/uploads/2014/12/Malaysia_IPO_2015_data-e1420397671360.jpg" alt="Expected big-ticket IPOs in 2015 (compiled by Liz Lee, DSA)" width="550" height="588" /></a><figcaption id="caption-attachment-1767" class="wp-caption-text">Expected big-ticket IPOs in 2015 (compiled by Liz Lee, DSA)</figcaption></figure>
Malaysia&#8217;s 2014 IPO scene has been tepid, with total raised funds not even reaching the amount raised in either 2013 or 2012, he points out.
Bursa Malaysia ended 2014 with 15 IPOs.
The major IPOs of 2014 were<a style="color: #0000ff;" href="http://www.ioiproperties.com.my" target="_blank"> IOI Properties Group Bhd</a> ($580 million), <a href="http://www.boustead.com.my/" target="_blank">Boustead Plantations Bhd</a> ($324 million), <a href="http://www.iconoffshore.com.my/" target="_blank">Icon Offshore Bhd</a> ($295 million) and <a href="http://www.7eleven.com.my/" target="_blank">7-Eleven Malaysia Holdings Bhd</a> ($227 million). Cumulatively, these major IPOs raised a total of $1.43 billion.
2014: A Year of Delayed Mega Listings
Although Malakoff, 1MDB and IWH were targeted to list in 2014, the IPOs did not materialise. Malakoff’s parent company <a href="http://www.mmc.com.my/" target="_blank">MMC Corp Bhd</a> said it postponed the IPO because it was waiting for one of Malakoff’s power plants to become fully operational, according to Reuters.
In the past few months, sovereign wealth fund and private investment vehicle 1MDB’s financial situation has been under the spotlight. With local media and political opposition scrutinising its operations and high debt level amounting to $42 billion as of March 31.
Partly government-owned property developer IWH’s listing delay was reportedly due to concerns that government measures to stabilise property prices would slow demand from foreign buyers.
Even as the market treads into 2015 against the backdrop of softening crude prices and hesitant investors, Gan believed that those factors were not detractors to the IPOs in the pipeline.
“Market sentiment will have bearing on valuation but I don’t think the issuers will put off their IPOs. If they can, they will like to time the market but that will not be necessary. Unless they cannot cover their books, those already in the process and at an advanced stage, will proceed once they have the necessary approvals,” Gan said.
A head of research from a local financial group said that the market is actually favourable to IPOs like Malakoff and 1MDB Energy, as the power sector will not be as affected by weak sentiment. “These IPOs should be okay as the power sector is considered resilient. If the market is bad, it’s good for them (because investors will want to look for resilient stocks),” he said.
This echoed <a href="http://www.kenanga.com.my/" target="_blank">Kenanga Research’</a>s market strategy report where head of research Chan Ken Yew said: “In view of the higher market volatility going forth, investors may also consider resilient sectors such as telecom, sin sector (brewery, tobacco), real estate investment trust (REITs), power, pharmaceutical and consumer staple food sectors.”
2015: Buoyed by SPACtacular trends
While 2014 saw only one special purpose acquisition company (SPAC) being listed, three prospective SPACs are looking to raise money through IPOs in 2015.
Interestingly, these are not from the oil &amp; gas sector, which has been dominating the SPAC category, till now.
SPACs are companies which have no operations or income-generating business at the point of their IPO, undertaking a share offering for the purpose of raising funds to acquire operating companies or assets, otherwise known as a qualifying acquisition (QA).
The coming year is likely to see a slew of SPACs from a variety of industries: Red Sena Bhd, which is in the food &amp; beverage industry, <a href="http://www.chemarapalmea.com/" target="_blank">Chemara Palmea Holdings Bhd</a> in oil palm plantation, Asean Healthcare Group Bhd and <a href="http://www.bphealthcare.com/" target="_blank">BP Healthcare</a> in the healthcare.
Red Sena is looking to raise MYR400 million ($114 million) from its IPO, offering 800 million new shares at an issue price of 50 sen each. The SPAC is planning to make its QA in the branded packaged F&amp;B business around Southeast Asia.
Chemara Palmea will be the first plantation-based SPAC and is targeting to raise MYR650 million ($186 million). The company had laid out in its draft prospectus that for its QA. It intends to acquire oil palm plantations or up to 95 per cent stake in companies that own oil palm plantations in Indonesia and up to 100 per cent stake in similar companies in Malaysia.
Asean Healthcare Group Bhd is looking to raise MYR750 million ($214 million). The SPAC intends to acquire at least one secondary or tertiary care hospital with 100 to 500 beds in Malaysia, together with any complementary services attached to such hospitals, for its QA.
While there is not much information on BP Healthcare’s intention to list as a SPAC, Reuters had reported in September that the company was planning an IPO application.
As SPACs do not have operations at the time of IPO, there is no track record to win investor confidence. They often rely on the merit and credibility of their management teams in the run-up to the listing.
Red Sena is helmed by a team who have experience in Fraser &amp; Neave Holdings Bhd (F&amp;N). The chief strategist officer for the F&amp;B SPAC is former CEO and CFO at F&amp;N Tan Ang Meng.
Mohamad Helmy Othman Basha, formerly head of plantation upstream Malaysia at Sime Darby Bhd, is the managing director for Chemara Palmea.
Former Hong Leong Bank Bhd group managing director Yvonne Chia is heading Asean Healthcare as executive director and chairman.
Image: <a href="http://www.freedigitalphotos.net" target="_blank">freedigitalphotos.net</a>

Malaysian cos to raise $6.64b in IPOs in 2015

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