(The Wall Street Journal) - SINGAPORE: Another Malaysian company, this time the owner of the country's busiest port, is looking to test investor appetite for an initial public offering (IPO), the latest in a string of big-ticket deals that are making the Southeast Asian country one of the world's hottest IPO markets this year.
The company, Westports Malaysia Sdn Bhd began inviting bankers to pitch to advise it on plans to raise about US$1 billion (RM3.09 billion) from an IPO, three people familiar with the transaction said recently, adding to a long queue of billion-dollar-plus listings.
The company is owned by entities linked to Hong Kong tycoon Li Ka-Shing and Malaysian industrialist G. Gnanalingam.
Benefiting from a strong tradition of state investments in public stocks and a resilient economy, Malaysia is already home to two of three biggest IPOs in the world this year behind Facebook Inc, the US$3.1 billion (RM9.6 billion) offering from state-backed palm-plantations owner Felda Global Ventures Holdings Bhd (Felda) and hospital operator IHH Healthcare Bhd (IHH)'s US$2 billion (RM6.18 billlion) dual Singapore and Malaysia listing last month.
With those listings and others pending, from a cable-television operator and a domestic power firm, Malaysia has become a rare bright spot for offerings, while elsewhere markets are suffering from an IPO drought.
Both Felda and IHH had heavy investing from Malaysia's Employees Provident Fund and other state funds, which took on cornerstone roles that committed them to holding those stocks for at least six months after they were listed, in exchange for early dibs in the IPO.
Bankers say that state-owned funds tend to invest heavily in the country's stock market, which the government is pushing to deepen. Encouraged by the success of Felda and IHH, other companies such as cable-TV operator Astro All Asia Networks PLC (Astro) and power company Malakoff Corp Bhd (Malakoff) are all planning to list in the next year or so, people with knowledge of the plans said.
Malakoff recently lined up banks for its near US$1 billion IPO, while Astro, which is partly owned by Khazanah Nasional Bhd, the investment holding arm of the Malaysian government, has sought regulators' approval for a planned US$1.5 billion (RM4.64 billion) IPO, according to people familiar with the matter.
Shares of Felda and IHH are up 10 per cent and 11 per cent respectively, after going public. Malaysia's benchmark FTSE Bursa Malaysia KLCI is up 7.8 per cent this year, having hit a record high on August 14th.
"Investors are often puzzled by the resilience of Malaysian equities," Nomura analysts noted last week, but said that Malaysia's exposure to Europe's woes is decreasing. Exports to Europe, at 9.1 per cent are down from 11 per cent in 2010.
Malaysia's buoyant market comes as IPOs elsewhere have either been delayed or scrapped owing to volatile market conditions.
In Hong Kong, pulled IPOs have become common. UK-based Graff Diamonds scrapped its US$1 billion IPO this year, while in Singapore, motor-sport franchise Formula One Group postponed its approximately US$2.5 billion (RM7.73 billion) offering at the end of June as bankers, wary of anaemic demand, cancelled planned capital raising.
Westports operates one of Asia's busiest shipping terminals at Port Klang on the west coast of Peninsular Malaysia, whose top exports are electronics and palm oil.
Hutchison Port Holdings Trust (Hutchison Port), which is controlled by Hong Kong's Li and operates 52 ports in 26 countries, has a 31.5 per cent stake in Westports, which was formed by Gnanalingam, who is listed as the country's 24th-richest person, according to Forbes, from the privatisation of government port assets in the early 1990s. His oldest son, Ruben, is chief executive of the company.
Hutchison Port declined to comment on the prospective IPO. Westports wasn't immediately available for comment.
The IPO would be the most recent equity-capital raising for groups linked to Li in Southeast Asia in recent years. Hutchison Port raised US$5.5 billion (RM16.99 billion) in Singapore's largest-ever IPO in early 2011.
Li, one of the wealthiest men in Asia, also held the first yuan-denominated IPO outside China last year in Hong Kong - the US$1.6 billion (RM4.94 billion) IPO of Hui Xian REIT.