Capital markets executive summary | Mon 12 Jun 2023

Capital markets executive summary | Mon 12 Jun 2023

Zantat plans to list on ACE Market

The initial public offering (IPO) involves 72.8m shares – 56m new shares and 16.8m existing shares – or 26% of the enlarged shares of 280m. The company will make 14m shares available for the Malaysian public, 11.2m pink form shares for eligible directors, employees and persons who have contributed, and the remaining 30.8m shares will be privately placed to selected investors. M&A Securities will underwrite the 25.2m shares for the Malaysian public and pink form allocations. Zantat’s majority shareholder is CLHF Resources with 53.3%, which is controlled by non-independent non-executive deputy chairman Chan Hup Ooi with 61.1%. He also owns 3.7% directly in Zantat. The company produces ground calcium carbonate (GCC), calcium carbonate dispersions and kaolin dispersion. It processes ultrafine precipitated calcium carbonate powder, trades industrial minerals and sells limestone quarry products. Its key markets are India and Malaysia, and to a lesser extent Indonesia, the Philippines, Thailand, Australia, Nepal and Sri Lanka. Zantat’s revenue and earnings per share were RM107.21m and 2.2 sen (FY2020), RM119.46m and 2.3 sen (FY2021) and RM113.02m and 1.9 sen (FY2022). The IPO proceeds will be used for purchasing new machinery and equipment to expand its GCC production line, introducing bioplastic compounding to its production, and upgrading 2 factory infrastructure in 2023 and 2024. M&A Securities is also the adviser, sponsor and placement agent.

MBSB buys MIDF in RM1.01b share deal

Malaysia Building Society Bhd (MBSB) will acquire the entire equity interest in Malaysian Industrial Development Finance (MIDF) from Permodalan Nasional Bhd (PNB) through the issuance of 1.05b MBSB shares – 12.78% of its enlarged shares – to PNB at 96.52 sen per share. The RM1.01b price for MIDF is 0.85 times the price-to-book value ratio (PBR) of MIDF’s adjusted net assets as at 31 Dec 2022 (excluding the RM450m dividends to be paid to PNB), whereas the issue price of 96.52 sen per MBSB share is at a PBR of 0.83 times MBSB’s adjusted net assets. The merged entity with a combined RM61.79b in assets, will remain the 2nd largest standalone Islamic bank after Bank Islam with assets of RM89.85b. EPF’s shareholding will fall from 65.87% to 57.45%. The transaction which is expected to be completed in 3Q2023 is pending the approval of MBSB shareholders, the SC and Bursa. Kenanga is the independent adviser while AmInvestment Bank is the principal adviser. The previous proposal to merge MIDF with AlRajhi was cancelled in 2020 due to difference of whether to implement Malaysian or Saudi Arabian shariah law. The deal valued MIDF at a PBR of 1 time or RM1.7b. MBSB closed at 63 sen.

Bioalpha proposes 3-for-8 rights issue of warrants

Up to 639.5m warrants will be issued based on 3 warrants for every 8 shares. Assuming a price of 3 sen per warrant, the health supplement manufacturer will raise RM3m-RM19.19m. RM6.6m is for buying stocks. RM5.5m is for repayment of bank borrowings, RM3.5m for launching new health supplement products, RM2.835m for working capital, and RM750k for rights issue expenses. The exercise price of the warrants is assumed at 10 sen, a discount of 1.96 sen or 16.36% to the pro forma net assets per share as at 31 Dec 2022. The exercise is expected to be completed in 3Q2023. TA Securities is the adviser. The counter closed at 9.5 sen.

RAM Ratings places SPR Energy’s senior sukuk on negative rating watch

The company’s RM580m senior sukuk ijarah is rated BBB2. The action was driven by an unexpected incident at the 2nd gas turbine generator of the company’s 100MW combined-cycle gas turbine power plant in Kimanis, Sabah. This came after the scheduled major inspection was completed in Dec 2022, including replacement works for the 2nd heat recovery steam generator. SPR has been operating at half load with the 2nd gas turbine generator being offline since 1 Apr 2023. Further investigations are being undertaken to determine the root cause and propose remedial action with Sabah Electricity Sdn Bhd’s and the Energy Commission’s support. RAM Ratings anticipates the rating watch to be resolved in 4-5 months with more information available on the capital expenditure required for repairs, the quantum of the revenue loss and insurance claims.

Intel’s friend-shoring strategy hits a snag in Germany

The chipmaker’s EUR17b chip plant in the city of Magdeburg is facing higher energy and construction costs. It earlier received commitment of EUR6.8b in government support and is now asking for EUR10b. The German government refused the request saying that it is consolidating its budget and there is no room left. Geopolitical tensions have forced the company to embark on a USD88b investment drive across Europe, including upgrading a factory in Ireland, building a packaging and assembly site in Italy, and setting up a design and research facility in France. Other companies like Taiwan’s TSMC and the US’ Wolfspeed are also seeking government funding to build a factories in Europe.