Eurozone crisis may hit FELDA IPO
KUALA LUMPUR, June 7 — FELDA Global venture Holdings Bhd’s (FGVH) listing on Bursa Malaysia at the end of this month could be rough as the eurozone crisis has seriously drained firms making their market debut in the last five months, a financial paper reported today.
Three out of five companies listed this year have lost between four per cent and 20 per cent of their market capitalisation value as at end-May, The Edge Financial Daily reported, citing an initial public offering (IPO) performance review on Malaysia’s main bourse.
The paper named property developer Sentoria Group Bhd, elevator-maker and electronics distributor Eita Resources Bhd and tech firm Pestech International Bhd as those hit.
Only oil and gas firm SapuraKencana Petroleum Bhd and China Stationary Ltd have grown 5.24 per cent and 40.91 per cent respectively at the bourse at the close of their debut, the paper reported.
A Greek exit from the eurozone on top of the economic slowdown in the world’s two biggest economies, the US and China, have sent the jitters throughout the regional markets and sparked a fresh round of selling earlier this week,
“There is a lot of unquantifiable risk here. I have never dealt with an IPO that had so many doubts,” a fund manager was reported as saying by The Edge.
The unnamed source was reported listing several key dates that could impact FELDA’s IPO — June 17 when Greece goes to the polls, June 19 and 20 when the US Federal Open Market Committee may announce a third round of quantitative easing, and when the European Central Bank will hold its meeting to decide on a long-term debt refinancing plan.
FGVH is Asia’s biggest IPO since February 2011 and the second biggest this year behind social media network Facebook’s float which raised US$16 billion (RM49.6 billion).
The commodity giant’s backers believe it will ride out the bleak economic weather due to the strong demand for palm oil, but political opposition to its listing remained strong especially among the rural Malay community ahead of key polls that could see a change of government in Malaysia.
Putrajaya is forging ahead with FELDA’s controversial public listing despite criticism from some settlers and the opposition who claim that it will shortchange some 112,000 FELDA settlers nationwide.
Najib has assured the settlers that the listing would yield profits, and has announced a RM1.69 billion windfall for all settlers and staff throughout the country ahead of the FGVH listing.
The IPO of 2.188 billion shares is currently based on an indicative retail price of RM4.55 a share with an institutional offering of 1.915 billion shares while settlers and employees of FELDA will gain access to 200.6 million shares, or a 5.5 per cent stake, out of a total retail offering of 273.61 million.
The indicative retail price is RM4.55 per share and subject to refund to the difference if the final retail price is less than the retail price.
This would see a total of RM9.959 billion to be raised from the listing exercise, with another half a billion ringgit available through an overallotment option of 109.4 million shares.
FVGH reported a net profit of RM1.01 billion last year compared with RM929.4 million in 2010. Its revenue was RM7.5 billion in 2011 and has been growing at a compounded annual rate of 61 per cent since 2009.
According to the prospectus, RM5.5 billion in gross proceeds from the sale would accrue entirely to the selling shareholders with RM4.5 billion going into capital expenditure.