Capital markets news summary for Wed 29 Mar 2023

Capital markets news summary for Wed 29 Mar 2023

Sime Darby and Ramsay attempt to sell hospitals again

Ramsay Sime Darby Healthcare was set up in 2013 with equal shareholdings by Ramsay Health Care – Australia’s largest private hospital operator – and Sime Darby with the intention of expanding their healthcare business in Southeast Asia. It has a portfolio of 1,567 beds in 7 hospitals in Malaysia and Indonesia plus a day surgery facility in Hong Kong. In Mar 2022, IHH Healthcare Berhad submitted a proposal to buy the company. At the same time, Sime Darby and Ramsay were also considering an IPO. Weeks after KKR & Co Inc withdrew a USD15b all-cash buyout offer for Ramsay Health Care, discussions for the sale with IHH Healthcare were called off in Sep 2022. The parties are currently in discussions with financial advisers to explore a sale of Ramsay Sime Darby Healthcare to strategic investors in a deal that could value the business at RM6b. The potential sale comes amid improved investors’ appetite for healthcare assets in the belief that it would be able to weather the challenging economic environment. Sime Darby closed at RM2.15.

E&O to pay RM46.95m for PDC’s 12% in Seri Tanjung Pinang

Seri Tanjung Pinang is a seafront development masterplan on the north-east coast of Penang island. Phase 1 – 240 acres – is has been fully reclaimed and is nearing completion. Phase 2 – the Andaman Islands – is further split into 2 phases. Phase 1 of the Andaman Islands – 253 acres – has been reclaimed and is proceeding with development over the next 15 years with a gross development value of RM17b. Reclamation works for Phase 2 of the Andaman Islands will be completed in the next 3 years. Eastern & Oriental Berhad (E&O) directly owns 70% of Tanjung Pinang Development Sdn Bhd (TPD) – which has the concession to reclaim and develop Seri Tanjung Pinang. The balance 30% is held by E&O-PDC Holdings Sdn Bhd – which is owned 60% by E&O and 40% by Penang Development Corporation (PDC). The acquisition of that 40% from PDC – scheduled for completion in Dec 2023 – will enable E&O to own 100% in TPD where the main development activities for the company will be concentrated on over the next 30 years. The RM46.95m purchase consideration will be funded via internally generated funds, shareholder advances and external borrowings. E&O closed at 31 sen.

Malaysia has USD1.4b potential deals for upstream O&G assets

Oslo-based Rystad Energy said that USD700m of deals have been completed in 2023, the strongest start for Southeast Asia’s upstream mergers and acquisitions (M&A) activity since 2019. Of the USD5b potential M&A deals, Indonesia has USD2.3b on the market while Vietnam is just below Malaysia at USD1b. 74% of the assets for sale are in the pre-final investment decision stage, 5% under development and 21% already in production. The assets represent 4m barrels of oil equivalent (boe) and 270,000 boe of daily production with a gas-to-liquids ratio of 63:37 which is attractive to investors. Recent upstream transactions in Southeast Asia indicate valuation at USD17,000-USD20,000 of daily production and USD2-USD3 per boe of resources.

Indonesia’s Merdeka Battery Materials plans IPO to raise RM2.56b

The company – a unit of PT Merdeka Copper Gold – will be listed on 18 Apr 2023 in the 2nd largest IPO in Indonesia for the year. This will be the 2nd nickel producer to go public this year after PT Trimegah Bangun Persada of the Harita conglomerate raised RM2.927b in a listing slated for 12 Apr. Merdeka plans to sell 11b shares (10.24%) at IDR780-IDR795 (23 sen), with an over-allotment for 1.1b additional shares (1.01%) bringing the proceeds to RM2.816b. The IPO proceeds will be used to repay USD300 million in outstanding loans, for working capital and for the development of the first phase of a high-pressure acid leaching plant in Sulawesi island with a capacity of 120,000 tonnes per year in collaboration with Ningbo Brunp Contemporary Amperex. The IPO comes as electric vehicle sales are surging. BYD reported that its 2022 net profit rose 446% to RM10.6b as it sold 1.86m electric vehicles and plug-in hybrids, more than 2018-2021 sales combined, and accounting for 30% of all new energy vehicle sales in China.

Google’s search rival raises USD26m

San Francisco-based Perplexity AI – which uses artificial intelligence (AI) to run a conversational search engine launched in Dec 2022 – just raised USD25.6m in a funding round led by New Enterprise Associates. The company is part of a growing number of startups using AI to grab Google’s market share in the search market. Similar to Microsoft’s Bing chat, users type simple queries on its website – https://perplexity.ai – and the AI responds with short answers plus references. The company launched an iOS app on 28 Mar as most of its traffic comes from mobile devices. Among its investors are Yann LeCun – chief AI scientist for Meta Platforms Inc and at least 6 current and former AI researchers at Google and sister company DeepMind, including Jeff Dean, Google’s senior vice president for research and AI. Google executives declared a code red after OpenAI’s ChatGPT was launched fearing being overtaken by the AI startups one day. Other than Perplexity, Character.AI recently raised USD150m while Adept raised USD350m.