Capital markets executive summary | Mon 24 Jul 2023

Capital markets executive summary | Mon 24 Jul 2023

KGW IPO oversubscribed 50.45 times

The logistics service provider received 11,329 applications for 1.24b shares worth RM260.81m from the Malaysian public. 6,868 applications for 624.4m shares were received for the bumiputra portion or an oversubscription of 50.74 times. The remaining public portion took in 4,461 applications for 617.4m shares or an oversubscription of 50.16 times. Also fully subscribed are the 9.6m shares for directors, employees and persons who have contributed. TA Securities is the principal adviser, sponsor, underwriter and placement agent. Eco Asia Capital Advisory is the financial adviser. KGW will be listed on the Ace Market on 1 Aug 2023.

7-Eleven sells Caring to BIG Pharmacy

The company’s subsidiary, Convenience Shopping (Sabah) Sdn Bhd, received an offer from BIG Pharmacy Healthcare Sdn Bhd to acquire its 75% equity in Caring Pharmacy Group Bhd for RM637.5m. After the disposal, the company can redirect its resources to grow its convenience store business. The offer covers all intellectual property rights owned and utilised by Caring Group and its Indonesian businesses, including its brands. It excludes the businesses in Indonesia operated by PT Era Caring Indonesia, its 50.1%-owned joint venture, and PT Era Farma Indonesia, its 49.9%-owned joint venture. The excluded businesses will be carved out as a condition precedent for the disposal in the sale and purchase agreement. The company’s board decided to accept the offer on Friday and trading for the company was suspended from 2.30 pm pending the announcement. The company said that it is an opportunity to unlock and monetise its investment in Caring. The counter closed at RM2.20.

Globaltec unit finalising Indonesia coal bed methane PSC

NuEnergy Gas Ltd, Globaltec Formation Bhd’s subsidiary, which is listed on the Australian Securities Exchange, is a gas and ancillary power generation company whose primary activity is unconventional gas exploration and development in Indonesia. It finalised the location of the well sites and is in the final stage of land acquisition for the Tanjung Enim production sharing contract (PSC) in South Sumatra. On 6 Jun, NuEnergy and SKK Migas, the Indonesian special task force for upstream oil and gas business activities, conducted a site visit and socialisation process with the local community. On 10 Feb, NuEnergy’s subsidiary, Dart Energy (Tanjung Enim) Pte Ltd, signed a heads of agreement with PT Laras Ngarso Gede for the supply of coal bed methane in the Tanjung Enim PSC. Globalteq closed at 49 sen.

TSH Resources proposes secondary listing on SGX

The oil palm plantation company is planning a secondary listing for all its existing shares listed on the Main Market of Bursa Malaysia on the Main Board of the Singapore Exchange (SGX). After the secondary listing, shareholders may transfer their shares listed on Bursa to SGX and vice versa for trading on the respective stock exchanges subject to transfer conditions and criteria. The secondary listing will improve trading liquidity, and the larger pool of investors at the SGX could be tapped for cost-effective fundraising. The company will also gain attention from international investors and traders with wider research coverage from the research houses in Singapore. TSH will submit the application to the Singaporean authorities in 3 months from 21 Jul with completion by 3Q2023. The counter closed at RM1.

US Federal Reserve expected to raise rates to 22-year high

After the pause in Jun, the Federal Reserve is anticipated to tighten monetary policy on 26 Jul. The pause came after 10 straight increases in a little over a year. It wanted to give policymakers more time to evaluate the condition of the US economy and the effect of the recent banking collapses on lending conditions. Improved outlook for a soft landing and slowing inflation have raised the probability of a 0.25% hike. The federal funds rate will go up to 5.25%-5.5%, the highest since 2001. Bank of America believes that the Federal Reserve committee members are skewed towards rebalancing supply and demand so that disinflation continues.