Bursa Malaysia’s Main Market IPO pipeline for 2019 – in terms of both numbers and size of the offerings – looks “much, much better” despite global headwinds and local change of government in 2018, according to outgoing CEO of the bourse, Tajuddin Atan.
“Other markets are also not providing as many IPOs. In our case, I agree that last year, despite the number of IPOs, most of them are on the LEAP or ACE Market. There were some [IPO] approvals that were made, but the companies themselves decided to hold back [the listing]. Moving forward, this year we’ve already seen four listings – two in LEAP and two in ACE Market – some of the companies that got their approval [to list last year] will come back this year,” he told a media briefing in Kuala Lumpur in conjunction with the release of Bursa’s 2018 financial year and fourth quarter results on Wednesday.
Some of the highly-anticipated IPOs on the Main Market of Bursa Malaysia include QSR Brands (M) Holdings, which operates KFC and Pizza Hut outlets in the region, and poultry producer Leong Hup International. Local home improvement retailer Mr. D.I.Y is also exploring an IPO but has yet to decide if it will list in Malaysia or Hong Kong. Interestingly, these businesses are all backed by private equity firms.
Media reports said Leong Hup is seeking to raise $600 million via IPO while Mr. D.I.Y is looking to raise about RM1.5 billion ($362 million). QSR is said to be looking to raise RM2 billion ($490 million). Last year, the Main Market saw only one IPO, Mi Equipment Holdings Bhd, that raised about $46 million.
According to Tajuddin, the negative market sentiments is the main reason that businesses are holding back from going into the public market.
“You must remember, putting capex/capital in the market, requires a gestation period. If you want to come in with this amount of money, you have to have the confidence in the market that the economy will resolve and it has potential to grow. The question that everyone should ask is – where is the growth? What is the potential? Our market has deep liquidity because we have domestic and institutional funds that have liquidity to purchase assets,” he said.
Tajuddin, who has been CEO of Bursa Malaysia since 2011, will retire on February 11, and will be succeeded by Muhamad Umar Swift, who is currently group CEO and group managing director of MAA Group Bhd.
The net profit of the local bourse in the fourth quarter ended December 31, 2018, was down by 6.2 per cent to RM 51.9 million ($12.6 million), from RM 55.27 million ($13.45 million) a year ago, mainly due to lower contribution from the securities segment. Revenue for the quarter was down 8.7 per cent to RM 128.9 million ($31.4 million), compared with RM 141.2 million ($34.3 million) in the previous corresponding quarter.
Bursa Malaysia’s full-year net profit was slightly up by 0.4 per cent to RM224.04 million ($54.54 million), from RM223.04 million ($54.29 million) a year ago, while revenue decreased by 1.2 per cent to RM550 million ($133.8 million), against RM556.8 million ($135.5 million) in 2017.
“The securities market performance in 2019 is expected to be influenced by domestic and global developments such as Malaysia’s corporate earning results, US-China trade tension and China’s economic growth, amongst others. Nevertheless, the market is expected to continue to be resilient given the country’s sound economic fundamentals, diversified economic sectors and investor base,” said Tajuddin.
In a separate statement, the Malaysian Ministry of Finance has appointed Shireen Ann Zaharah Muhiudeen to be the public interest director and non-executive chairman of Bursa Malaysia, effective March 1. She will succeed Amursham A. Aziz who has held the role since March 1, 2015.
Shireen has more than 31 years of focused fund management experience in emerging Asia equity markets. She was a member of the World Bank’s International Finance Corporation’s working group for the establishment of the Philippine Stock Exchange’s Maharlika Board. She currently holds independent directorships in AMMB Holdings Bhd, and at the Federal Land Development Authority (FELDA).
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