At least nine major listings are in the works next year, which should raise more than RM18.4bil from the market.
Most of the issuers have already appointed their advising banks or are in the process of doing so.
Among the larger of these are the two related to Iskandar Malaysia, namely Iskandar Waterfront Holdings (IWH) and Medini Iskandar Malaysia, which together will seek to raise more than RM3bil.
The flotation of the two master developers will make them the first of their kind in Malaysia.
These are essentially companies that own vast tracts of valuable land but they don’t have a track record of being a developer themselves. They in turn will seek to strike joint ventures or divest parts of their land to make their profits. So it is left to be seen how the authorities and investors will take to these listings.
The other major listings will be by the owners of the country’s largest independent power producers, Malakoff Corp Bhd and 1Malaysia Development Bhd (1MDB). Both were initially planned for this year but delayed to 2014 for various reasons. The two initial public offerings (IPOs) will seek to raise money to reduce their debt levels.
Analysts have said they expect these power asset IPOs to be well-received, given their large market caps, resilient earnings and sustainable dividend yields.
A source from the banking sector said it may be too early to judge how the IPO market would fare in 2014.
“It is too early to predict at this moment as not all IPOs will come through.
“However, even on that basis, due to the brought-forward deals, the current deal flow for 2014 looks good compared with this year, with a good mix of mega (RM500mil and above) and mid-sized (around RM300mil) IPOs.”
In terms of total IPO value, the source said it should be about the same as this year.
“If more come through successfully with no delay, the total value could be more than this year,” the source added. “However, there are likely to be some delays.”
Besides these IPOs, there is likely to be another group of companies coming to the market under the guidelines for special purpose acquisition companies, or SPACs, and business trusts. There are said to be a number of interested parties seeking a SPAC listing but these issuers have to wait until additional guidelines for SPAC coming into place soon.
SPACs are essentially firms without any businesses that are listed with the aim of using the IPO proceeds to undertake mergers or acquisitions. Since the guidelines were introduced in 2009, three SPACs have been listed.
Business trust listings were introduced more recently. However, while there has been a fair bit of interest, the companies planning them are facing the challenge of providing a decent enough of a yield to attract investor interest in their flotations. This is because interest rates elsewhere are high and can get higher.
Furthermore, the under-performance of Singapore business trusts has done little to inspire confidence. Created a year ago, business trusts enable asset owners to list their cash-flow generating assets.
RHB Investment Bank Bhd director and regional head of equity capital markets Gan Kim Khoon recently said that investors should should ride on the wave of Malaysia’s IPO market, but only after doing their homework on the new entrants.
He noted that all the IPOs this year were making money for investors and said this trend was likely to continue next year, when speaking at a recent panel discussion on the prospects for next year’s equity market.
Gan reportedly said the timing and sectors were no longer the major considerations for investors buying into IPO counters and that investors should try to put their money into the IPO market.
