Capital markets executive summary | Mon 21 Aug 2023

Capital markets executive summary | Mon 21 Aug 2023

SSF Home signs underwriting agreement with M&A Securities

The furniture and home living products retailer signed the agreement for its initial public offering (IPO) and listing on the ACE Market. The company will issue 200m new shares while its shareholders will offer for sale 24m existing shares. 40m of the new shares are for the Malaysian public via balloting, 40m pink form allocations for directors, employees and persons who have contributed, 20m for private placement to selected investors, and 100m for bumiputra investors approved by the Ministry of Investment, Trade and Industry via private placement. M&A Securities will underwrite the 80m new shares for the Malaysian public and pink form allocations. SSF Home sells furniture, home décor and home living products through retail outlets and e-commerce websites. It began its retail business in 1990 and has a network of 41 retail outlets. The company will be listed in Oct 2023. M&A Securities is also the adviser, sponsor and placement agent.

Yinson obtains financing from private equity firm for Angola FPSO

Its offshore oil and gas unit Yinson Production signed an agreement with RRJ Capital for a USD300m (RM1.39b) financing for the floating, production, storage and offloading (FPSO) vessel to be deployed at the Agogo Integrated West Hub Development Project in Angola. The USD5.3b (RM24.63b) FPSO contract was awarded by Azule Energy in Feb. Azule, a 50/50 joint venture between BP and Eni, is Angola’s largest independent oil and gas producer. The zero emissions FPSO Agogo will become operational by 4Q2025 and have hydrocarbon blanketing and carbon capture systems. RRJ Capital, Yinson and Yinson’s Singapore-based asset management unit Farosson signed a collaboration agreement to jointly develop energy infrastructure and technology projects globally. RRJ Capital was founded in 2011 and is based in Hong Kong and Singapore. It has USD15b (RM69b) assets under management (AUM) focusing on private equity investments in Asia- Pacific, Europe and the US. Yinson closed at RM2.57.
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Aman Sukuk’s AAA rating affirmed

MARC Ratings affirmed the rating on the RM10b Islamic medium term notes programme. The total outstanding amount was RM2.25b at end-Jul 2023. The rating reflects the credit strength of the Malaysian government as the sole obligor of the annual sublease rental payments. Aman is wholly-owned by PBLT Sdn Bhd, which developed 74 build-lease-transfer projects for Polis DiRaja Malaysia including living quarters. Upon the completion of each project, PBLT entered into a lease agreement and a sublease agreement with the Malaysian government. The sublease rental payments were structured to cover the profit and principal payments of the sukuk. As at end-Apr 2023, the total cash balance in the security accounts was RM1.7b. The remaining sukuk profit and principal payments for 2023 is RM273.3m while the total for 2024 is RM790.3m.

LEKAS’ junior sukuk restructuring and redemption further extended

Lebuhraya Kajang-Seremban Sdn Bhd is the concession holder for the 44km Kajang-Seremban Highway. Its lenders have approved another extension for the repayment of the RM633m junior sukuk istisna’ (2007/2025) and RM460m redeemable convertible secured Islamic debt securities, from 31 Jul 2023 to 29 Sep 2023. The decision follows further delays in the company’s effort to refinance the facilities with a term loan. The new target date is end-Sep 2023. Progress has been slow and the junior sukuk, which was downgraded in 2013 to a C2 rating, has maintained a high risk of default with a negative outlook. The company depends heavily on the refinancing exercise because of its tight liquidity. The exercise must also be completed without a large loss in order to avoid a payment default on the junior sukuk. IJM owns 50% of LEKAS while KASEH Sdn Bhd owns the balance 50%. IJM closed at RM1.68.

Arm lines up 28 banks for biggest IPO in 2023

Barclays, Goldman Sachs, JPMorgan and Mizuho are the 4 lead banks. The 10 2nd-tier underwriters include Bank of America, Citigroup, Deutsche and Jefferies Financial Group. They are joined by 14 3rd-tier underwriters such as Daiwa Securities, HSBC, Intesa Sanpaolo and Societe Generale. Arm, which is based in Cambridge, UK, has been looking to raise USD8b-USD10b in Sep in the year’s biggest IPO valuing the company at USD60b-USD70b. Arm’s global reach, with its technology used in smartphones around the world, has attracted banks eager to participate in large IPOs as deals have dried up. In comparison, Saudi Arabia’s Aramco listed in 2019 with 25 banks underwriting. Separately, SoftBank acquired the 25% in Arm it sold to its Vision Fund 1 unit in 2017 in a deal that values the company at USD64b. It will likely keep 90% in the company after the IPO, thereby raising less than the USD8b-USD10b originally planned.