By A. Stephanie
Malakoff Corporation Bhd, Malaysia and Southeast Asia’s largest independent power producer (IPP), will list on Bursa Malaysia’s Main Market on May 15, with a RM3.15 billion capital raising topside from its initial public offering (IPO).
The power player launched the prospectus for its IPO today, which will see the sale of 1.52 billion existing and new ordinary shares at RM0.10 each, representing up to approximately 30.4% of the enlarged issued and paid up share capital of Malakoff.
The amount comprises over 520 million existing shares and a public issue of one billion new issue shares. Malakoff is part of the MMC Bhd group of companies.
Maybank Investment Bank’s chief executive officer John Chong, when asked about the deal value, said: “The total offering is up to 1.75 billion shares at an indicative price of RM1.80 per share.
“So that is a deal size of up to RM3.15 billion, including the over allotment option. At that level, it would be the largest IPO in Malaysia since 2012,” he said.
Maybank Investment Bank is the transaction manager and joint principal adviser for the IPO.
When asked about the basis of Malakoff’s share pricing, he commented: “Malakoff has a strong dividend policy, at no less than 70% of their earnings going forward – so a lot of the investors are focusing on this as opposed to the price-to-earnings (PE) multiple.”
The company is expecting to raise around RM2 billion of the RM3.15 billion maximum, with the IPO proceeds going towards fully redeeming an RM1.8 billion junior sukuk musyarakah.
Malakoff currently has a total effective power generation capacity of 6,036 megawatt (MW) and water production capacity of 358,850 cubic metres per day.
Malakoff chairman Syed Anwar Jamalullail said: “Following the listing exercise, we will have access to the equity capital markets for capital raising and will acquire financial flexibility needed to pursue the next phase of our growth.”
The IPP aims to increase its power generation capacity to 10,000MW daily and water production capacity by 150% by 2020 through domestic and international expansion.
Malakoff’s return to Bursa after being taken off the Main Market and privatised in 2007 comes after the company grew via acquisitions and new awards within a span of seven years.
Syed Faisal Albar
Malakoff CEO Syed Faisal Albar said: “Historically, Malakoff has added a new asset to our portfolio every two to three years, and we look to maintain this going forward.
“We purchased Port Dickson Power last year and Macarthur Wind Farm in Australia in 2013, a water and power plant in Bahrain in 2012, and we developed a greenfield water desalination plant in Algeria in 2011,” he recounted.
Syed Faisal continued: “Our combined overseas assets contributes 30-35% of profits, going forward we expect this to continue.
“As far as renewable energy is concerned, it contributes about 3% to earnings,” he said, referring to Malakoff’s 50% stake in Macarthur Wind Farm, the largest wind generation plant in the Southern Hemisphere.
Parent company MMC Bhd group managing director Che Khalid Mohammad Noh said the lead time to build a plant is usually four years, and even though the government has awarded power plant contracts up to 2020, there remains space for local growth.
He remarked: “At the moment, Malaysia’s total demand for electricity is 16,000MW currently. If you assume a 5% increase every year, we are looking at a new 800MW capacity plant required by the country on a yearly basis.
“Outside of Malaysia, demand for power continues to grow and the Asean countries are the world’s growth engine. Indonesia alone needs 36,000MW yearly, and we think this opportunity – fulfilling the urgent needs of regional neighbours – is something for Malakoff to explore,” Che Khalid said.
“Of course the familiar territory of the Middle East and North Africa is always there, but I think it is time we move into the Asean region where demand for power is very high, and with Malakoff’s expertise, we are well positioned to do so,” he added.
Malakoff has secured 12 cornerstone investors, including Tabung Haji, CIMB-Principal Asset Management, Maybank Asset Management, Kencana Capital, Eastspring Investments and the Social Security Organisation (Socso).
They have agreed to acquire approximately 533.8 million shares, representing approximately 10.7% of Malakoff’s enlarged-issued and paid-up share capital.
Abdul Wahid Omar
Minister in the Prime Minister’s Department Abdul Wahid Omar, who launched the prospectus, said it was bold of Malakoff to proceed with an IPO in the current challenging market.
He said: “Notwithstanding challenges we have in the market, we laud Malakoff’s decision to proceed with the IPO, proving that if you continue to focus on fundamentals, ensure management is good and instill confidence in the company, an IPO can be successful.
“Our hope is that more companies will take the lead from Malakoff and embark either on IPOs themselves or other capital-raising market exercises, ensuring that Malaysia’s economy continues to grow,” Abdul Wahid said.
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