The chemicals arm of Malaysian state energy firm Petronas raised US$4.1 billion on its stock market debut yesterday, in Southeast Asia’s biggest ever initial public offering (IPO).
Petronas Chemicals Group opened at 5.71 ringgit, a 9.8 percent premium on its institutional price. The result was at the top end of forecasts, reflecting strong demand for the region’s IPOs.
“It is an excellent price,” said George Ratilal, executive vice president for finance at Petronas.
PHOTO: AFP
“We are very, very satisfied with that,” he told reporters at the stock exchange.
The sale eclipses the US$3.3 billion launch of Malaysian mobile operator Maxis last year, and follows the successful offering of AIA, the Asian unit of troubled US insurer AIG, which raised US$20.5 billion dollars in Hong Kong this month.
Investors were attracted by a robust earnings outlook for the firm, a unit of Petroliam Nasional (Petronas), Malaysia’s only Fortune 500 company.
Petronas’ petrochemicals business includes 22 companies that produce chemical compounds, fertilizers, and industrial and specialty chemicals.
The sale is part of Malaysian Prime Minister Najib Razak’s ambitious Economic Transformation Program (ETP), a blueprint to revitalize the economy over the next decade and achieve developed-nation status by 2020.
The government is trying to energize the private sector by divesting some stakes in government-linked corporations, as well as adding much-needed depth and liquidity to the Malaysian bourse.
Yeah Kim Leng, group chief economist with RAM Holdings, said that Petronas Chemicals was drawing both long-term investors and the short-term “hot money” that is flowing into Asia’s more vibrant economies.
“Index-linked funds will have active interest in the stock, which will attract both domestic and foreign investors. It is an iconic stock which investors must have in their portfolio,” he said.
Ratilal was coy about speculation that Petronas, which has listed two subsidiaries this year, is preparing for further big sales.
“There is always speculation about this. Petronas is a large group. People look at some of our companies that we have which they think are right for floatation,” he said. “We are basically fundamentally driven. If we have companies which we think are ready, that can go to the market, that can be sustainable as a listing company, then we will look at it. And it has to be a balance of what is right for Petronas and what is right for the company itself.”
Analysts said the chemicals unit offering was well timed, coinciding with the current surge in global capital flows toward fast-growing emerging economies.
The listing involves the sale of a total of 2.48 billion shares, 72 percent of which are new shares and the remaining 28 percent of which are from parent Petroliam Nasional Bhd.
Malaysian pension funds were committed to taking 18 percent of the IPO. Another 37 percent will be offered to ethnic Malay investors, while 33 percent will be for book building and 12 percent for retail investors.
The Petronas Chemicals share price traded between 5.72 and 5.45 ringgit during the session and analysts said more volatility was expected as retail investors cashed in some profits.
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