Bigger IPOs expected on local bourse this year, says JPMorgan

Bigger IPOs expected on local bourse this year, says JPMorgan
Business & Markets 2014
Written by Shalini Kumar of theedgemalaysia.com  
Thursday, 20 February 2014 11:08

KUALA LUMPUR: JPMorgan Chase Bank Bhd expects initial public offerings (IPOs) on the local bourse this year to be bigger than 2012 in terms of the number and size of offering.

Chief executive officer Steven R Clayton said the IPOs will come from a number of different sectors, but declined to provide further details on the companies that are slated for listing on Bursa Malaysia.

“We envisage in the second half of this year, some fairly substantial IPOs. What’s preventing those IPOs from coming to the market now, is the offerings are not ready yet. It’s not so much because of the current perception of emerging markets,” he told a press briefing yesterday.

He hinted that JPMorgan will be advising some of the big corporations and government-linked companies involved in this year’s IPOs.

Based on previous news reports, the largest IPOs slated for this year are 1Malaysia Development Bhd (1MDB) and Malakoff Corp Bhd. 1MDB, expected to offer shares worth US$3 billion (RM9.9 billion), will list in the first half, followed by Malakoff in the second half of the year with approximately US$1 billion.

Other major listings expected this year include Iskandar Waterfront Holdings (US$200 million), Medini Iskandar Malaysia Sdn Bhd (US$800 million), Icon Offshore Bhd (US$250 million), Ranhill Energy and Resources Bhd (US$300 million), Weststar Aviation Services Sdn Bhd (US$600 million), Axiata REIT (US$250 million) and Boustead Plantations Bhd.

Permodalan Nasional Bhd, the country’s biggest fund manager, is also reported to be listing its own property trust with an IPO size probably as big as Malakoff’s.

Clayton said there would be a number of offerings this year that would surpass Felda Global Ventures Holdings Bhd’s record in terms of size. The company debuted on the main market in June 2012, raising some RM9.93 billion in proceeds from its IPO.

JPMorgan head of Malaysia research Mak Hoy Kit said he has a more bullish outlook for Malaysia’s economic growth, and expects the foreign direct investment level for 2014 to possibly surpass last year’s record levels.

“There are certain promoted corridors and sectors. Local growth could be driven by big capital expenditure (capex) coming from private money, energy-related companies and infrastructure,” he said.

One of his concerns for the economy is the high degree of foreign ownership of bonds, which is currently at about 43%.

“Any liquidity shocks will certainly have implications. But from a domestic liquidity perspective, we have more than enough surplus to weather it.

“The positive surprise will be if the intended capex comes through as planned, then we might be seeing a nice earnings lift to some of the sectors, and that in turn will give the market a lift too,” Mak said.

Commenting on the investment bank’s gross domestic product growth forecast of 5.5% for this year, he said the growth would be more capex-driven.

“We are expecting a narrowing of net imports and for exports to start to pick up. The consensus is that the other numbers will start to pick up as time passes,” Mak said.


This article first appeared in The Edge Financial Daily, on February 20, 2014.