Bursa Malaysia to raise at least $105m in IPO
Bursa Malaysia to raise at least $105m in IPO
Bloomberg, Kuala Lumpur
Bursa Malaysia Bhd., which runs the nation's stock exchange, said
it plans to raise at least 400 million ringgit (US$105 million)
in an initial sale of shares, as it seeks to upgrade trading
systems and boost volumes.
Bursa is offering institutional investors 116.9 million shares
at a price that will be determined on the basis of bids by
potential buyers, the company said in sale documents today. It
didn't provide an offer price.
Individuals will be offered 49.1 million shares at 3 ringgit
apiece, or at least a 3 percent discount to the final
institutional price.
The funds will help Bursa, which will become the fourth-
largest publicly traded stock exchange in Asia, install new
trading systems and set up links with exchanges in Singapore,
Thailand and Indonesia aimed at boosting regional share trading.
The Malaysian stock market is valued at about $186 billion,
ranking ninth in the Asia Pacific region.
"Bursa is coming to the market at a slight premium to its
regional peers, but there are quite a few options for the company
to enhance its income," said David Ng, who helps manage $395
million in assets at Hwang-DBS Asset Management Sdn. in Kuala
Lumpur.
"It's a must-have stock supported by decent dividend yields."
Bursa, which will list on the stock exchange next month,
expects net income in the year ending December 2005 to gain 72
percent to 60.3 million ringgit, and it plans to pay out at least
75 percent of its profit this year as dividends.
Based on the retail price of 3 ringgit, Bursa shares are
valued at a price-to-earnings ratio of 24.9 times projected 2005
earnings, the company said.
"Investors are not buying Bursa for growth just yet; they're
buying for a near-term dividend payout," said Geoffrey Ng, who
helps manage about $368 million as chief investment officer at
Pacific Mutual Fund Bhd. in Kuala Lumpur.
"It's a really sought-after stock."
Singapore Exchange Ltd., which runs the island state's
securities and derivatives market, trades at 14.3 times estimated
June 2005 earnings, according to Bloomberg data.
Australian Stock Exchange Ltd., which runs that country's
biggest exchange, trades at 22.2 times current-year earnings.
Shares of Australian Stock Exchange have surged fivefold since
their debut in October 2000 while Hong Kong Exchanges and
Clearing Ltd. stock has gained the same amount since it began
trading for the first time in June 2000.
"It's our challenge to boost trading volumes and draw the
interest of retail investors," Bursa Chief Executive Officer
Yusli Mohamed Yusoff told reporters on Wednesday. "We're ready to
embark on a new journey."
Bursa will decide the price which institutional investors pay
for stock on March 3. It aims to list on the Main Board of the
Malaysian stock exchange on March 18.
Shareholders include the Minister of Finance Inc., the Capital
Market Development Fund and member stockbrokers, each with a 30
percent stake. The country's 6,000-odd stock traders hold a 10
percent stake.
The sale is being arranged by CIMB Bhd., Malaysia's biggest
investment bank, and UBS AG.