Capital markets executive summary | Tue 13 Jun 2023

Capital markets executive summary | Tue 13 Jun 2023

RSS and IDSS minimum market cap reduced to RM200m

Bursa Malaysia announced that the minimum market capitalisation of approved securities for regulated short selling (RSS) and intra-day short selling (IDSS) has been lowered from RM500m previously. Securities that meet Bursa-prescribed criteria – or approved securities – may be used for purposes of securities borrowing and lending, and short selling. The revision in the criteria revision is intended to boost vibrancy in securities borrowing and lending activities, which are important for the capital market to function well. Bursa made a careful selection when updating the list of approved securities based on quantitative and qualitative criteria to ensure there is sufficient liquidity, and the integrity of the market is maintained. The broader access and choice for investors will improve market efficiency. The list is reviewed every 6 months and was last updated on 30 Nov 2022. It currently has 215 companies — more than 1/5 of the companies listed on Bursa, although there are 492 with market capitalisation of RM200m or more. Approved securities must meet the market capitalisation criteria for at least 3 months, at least 50m units in public float and average monthly trading volume of at least 1m units for a full year. Bursa closed at RM6.26.

MyCIF invested RM282m in ECF and P2P

The Malaysia Co-Investment Fund (MyCIF) was set up as part of Budget 2019 for co-investing in micro, small and medium enterprises (MSMEs) and social enterprises together with private investors via equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms. It is administered by the Securities Commission (SC) on behalf of the Ministry of Finance. ECF and P2P raised RM1.7b in 2022, an increase of RM300m or 26% from RM1.4b in 2021. MyCIF’s investment amount for 2022 was higher by 46.1% from RM193m in 2021. The fund has co-invested a total of RM638m in 3,635 firms, 94% of which are micro and small enterprises. In 2022, the fund implemented a 1:2 co-investment ratio for agricultural businesses, instead of its usual 1:4. It plans to expand this ratio to the environmental, social and governance (ESG) sector. The fund’s net return on capital is RM16.5m.

RAM Ratings assigns final AA3 rating to Exsim Capital’s issuance

The rating is for the RM300m 4th tranche issued out of Exsim Capital Resources Berhad’s RM2b sukuk musharakah programme. The programme enables the monetisation of progress billings by Exsim Development Sdn Bhd by selling its beneficial interest – under the sale and purchase agreements executed with buyers for specific property development projects – to Exsim Capital. Simultaneously, UOB will underwrite RM65m commercial papers as a liquidity line to cover transitory cash shortfalls in meeting profit payments and expenses relating to the 4th tranche and construction costs arising from timing mismatches between the development costs and progress payment receipts of The Fiddlewoodz residence. The rating was arrived at after considering the 99.1% take up rate for the project and construction progress.

Nasdaq buys fintech company Adenza

The acquisition of the Thoma Bravo-owned software firm for USD10.5b (RM48.4b) is the exchange operator’s biggest acquisition in line to becoming a more tech-focused company and drive growth. The purchase consideration will be paid USD5.75b in cash and with 85.6m Nasdaq shares or 14.5% of its outstanding shares. Adenza develops software used by banks and brokerages and is projected to earn USD590m in revenues in 2023. The Adenza acquisition will enable Nasdaq to have a more complete suite of essential software and technology solutions that make managing risks and complying with regulations simpler and more efficient for its clients. Although Nasdaq received a bridge loan to finance the cash consideration, it will issue USD5.9b debt securities in the 6-9 months between the signing and the closing of the deal.

Indonesia’s PalmCo to list by end-2023

State-owned PT Perkebunan Nusantara III (PTPN III) is merging 4 plantation subsidiaries into a newly setup PalmCo unit this month. The company is awaiting formal approval from creditors to clear the way for the initial public offering (IPO) process. PTPN III has appointed Mandiri Sekuritas, DBS, BNP Paribas and CIMB as underwriters. The IPO will raise up to IDR10t (RM3.11b), making the Indonesian market the busiest in 2023. Since Jan 2023, proceeds have risen 67% year-on-year. Other monster IPOs include gold and copper miner PT Amman Mineral Internasional which is raising IDR12.9t in Jul, the biggest this year, exceeding PT Trimegah Bangun Persada’s IDR10t in Apr. PTPN III will use the proceeds for downstream projects, including renewable energy production. The company will start constructing a biodiesel plant in Sei Mangke economic zone in North Sumatra this year, with production expected to begin in Jan 2024. It will also raise its annual cooking oil output from 460k tonnes to 1.8m tonnes in 2026. The 2 projects need USD270m (RM1.25b), including the cost to expand plantations to 650k hectares over 5 years. In addition, the company plans to manufacture sugar.