Ranhill's institutional portion oversubscribed

Ranhill's institutional portion oversubscribed
Business & Markets 2013
Written by Afiq Isa of theedgemalaysia.com
Friday, 05 July 2013 10:39

KUALA LUMPUR: The institutional portion for Ranhill Energy and Resources Bhd's IPO has been oversubscribed, barely hours after the launch of the company's prospectus, according to the company's book runners.

"The book building started this [yesterday] morning and it has already been oversubscribed due to strong response from investors," said Patrick Tan, CIMB Investment Bank Bhd regional head of capital equity markets.

According to Ranhill's IPO sheet, the company is undertaking an IPO of up to 407 million ordinary shares. It aims to raise up to RM750 million in proceeds.

Institutional investors are bidding for the 328.72 million shares on offer at an indicative price range of between RM1.70 and RM1.85. The remaining 78.28 million shares will comprise retail offerings at RM1.85 per share.

A greenshoe option has also been approved for the underwriters to stabilise Ranhill's share price upon listing, said Maybank Investment Bank Bhd regional head of equity capital markets Rajiv Vijendran.

He said the one-week delay in launching the prospectus was due to last-minute adjustments to the deal. “Ranhill wanted to make some additional disclosure in the prospectus which required discussions with the regulators," he said.

CIMB and Maybank are joint global coordinators, book runners and underwriters for the IPO.

The demand for Ranhill's offering was attributed to the interest shown by four major cornerstone investors — Corston-Smith Management Sdn Bhd, Eastspring Investment Bhd, Hwang Investment Management Bhd and Lembaga Tabung Haji.

The cornerstone investors received 118.27 million shares, representing 12.3% of Ranhill's issued and paid-up share capital, along with a 90-day lock-up agreement for the shares. The final institutional price will be set on July 15, with the listing scheduled on July 31.

Some 54% of the IPO proceeds will be utilised to redeem outstanding Islamic medium-term notes held by Ranhill Powertron Sdn Bhd, a 60:40 joint venture company between Ranhill Power Sdn Bhd and Sabah Energy Corp Sdn Bhd.

Ranhill has also allocated 10% of the gross proceeds for the expansion of environment assets in China, which involves industrial wastewater treatment.

According to Ranhill CEO Tan Sri Hamdan Mohamad, the company's China expansion plans will take up to five years to complete. “We stand to gain RM500 million in annual revenue if our plants in China process 1,000 million litres per day (MLD) of water," he said.

The group currently processes a total of 240 MLD of water from six treatment plants in China, with each having a concession period of 25 years or more. “The projects are small but numerous. It's good to start small," Hamdan added.

Ranhill is a Malaysian conglomerate with interests in two main sectors — energy and environment. In the energy sector, its oil and gas subsidiary Ranhill Worley Parsons is one of two global hubs for mega decks, floating production, storage and offloading facilities and floating LNG facilities for the Worley Parsons Group.

The company also possesses lengthy concessions in water and power assets across Southeast Asia, which are low risk sources of recurring income.


This article first appeared in The Edge Financial Daily, on July 5, 2013.