Bursa IPO pipeline to remain healthy

Bursa Malaysia Bhd is likely to keep up its recent
trend of drawing over 20 initial public offerings (IPOs) a year,
although the market is expected to turn soft in 2012, said its chief.

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This year is set to end with 28 new listings, just one short of last
year’s 29. Together, they raised funds of close to RM7 billion.

The largest was that of tycoon T. Ananda Krishnan’s Bumi Armada Bhd in July, which raised RM2.7 billion.

Bursa
chief executive officer (CEO) Datuk Tajuddin Atan said it was difficult
to say if the exchange would be able to top this year’s number, even
though the local market has been relatively resilient, in the face of
stormy markets globally with the European debt crisis deepening.

“Hopefully (we can), but next year is challenging
...
very, very challenging. You know for a fact that markets are soft. But I
think, what we’ve seen here is that our market is resilient.

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So, consistently above 20 is still good. Above 20 is a good number for an exchange of our size,” he told Business Times.

At the time of the interview, Bursa was in the midst of crunching out its listing target number for 2012.

Still,
Tajuddin claimed he is not overly concerned about numbers, per se, and
insists there continues to be “strong pipeline” of companies that could
list when the time is right.

“I’m more interested in a consistent pipeline and in the quality of companies that come in,” he remarked.

Investment
bankers said Tajuddin has advised some of them to be more mindful of
the quality of companies they bring to the market.

The biggest
IPO slated for next year is plantation group Felda Global Ventures',
which is expected to happen in April and and will reportedly raise
around RM6 billion, making it the largest since the record RM12.8
billion IPO of Petronas Chemicals Group Bhd last year.

Other
sizeable ones to come include Khazanah Nasional Bhd's healthcare unit
Integrated Healthcare Holdings, which may happen in the first half, and
Gas Malaysia, which sources said could be in February or March.


Gas Malaysia, a unit of MMC Corp Bhd, was initially to have listed late
this year but delayed the move as it is still trying to comply with some
conditions imposed by the Securities Commission.

Stock exchange data shows that as at December 14, 15 of the 28 companies listed this year were trading below their IPO prices.

Tengku Datuk Zafrul Tengku Abdul Aziz, CEO of Maybank Investment
Bank, which ranks second on the Bloomberg league table of top
underwriters for IPOs here, said blue-chip companies were more likely
than small firms to brave a listing next year amid the more cautious
market sentiment.

While there is still ample liquidity to
support IPOs, investors have become risk-averse and are more selective
in what they go for, he noted.

"It's going to be tough for smaller companies.

"People
are looking not only for a growth story but also yield play," he said,
adding, however, that small Ace Market-type companies with "solid"
fundamentals and earnings could still attract investors.

Azlin
Arshad, ECM Libra Investment Bank deputy CEO, said there would be
"pockets" of opportunity for companies, including small ones, to list
next year.

"You're going to get pockets, windows, where
suddenly liquidity is back and investors have an appetite for new
issuances. It won't be throughout the year," she said.