Capital markets executive summary | Mon 16 Oct 2023
Capital markets executive summary | Mon 16 Oct 2023
Drama expected at KNM EGM today
The extraordinary general meeting, called by German billionaire Andreas Heeschen, will allow 34,018 shareholders to decide on the fate of the company, which has RM1.1b debt. Heeschen’s group is concerned about the viability of the company’s asset disposal plan including the IPO of Borsig, a German machinery and equipment company valued at EUR300m. Last Fri, he proposed an alternative by raising EUR110m (RM550m) via bonds to kick off the debt restructuring. In 90 days, the group plans to collateralise KNM’s assets for the bonds issuance the proceeds of which will be used to pay down the company’s debt. The bonds subscribers, European institutional investors, have been identified. The bonds and subsequent shareholders’ injection of RM600m were outlined in a 5-year plan that includes investments into existing assets and injection of additional business. Among others, the Impress ethanol project in Thailand will be restarted and its capacity may be increased from 200k to 500k litres per day. Heeschen and Johor’s Tunku Kamariah Sultan Iskandar are seeking to replace the KNM board of directors. Ravindrasingham Balasingham, the managing director and CEO, was sceptical and cautioned that the current creditors will seize Borsig and KNM assets if Heeschen wins. According to him, the creditors are confident that the scheme of arrangement (SOA) being drafted will gain the High Court’s approval at a court-convened creditors’ meeting to be called. The counter closed at 12 sen.
Hexza made US stock transactions worth USD12.4m
The ethanol manufacturer paid USD7.77m (RM36.72m) for 185k shares of Nasdaq-listed robotics warehouse automation company Symbiotic Inc at USD41.98 per share with internally generated funds. The investment was made with the intention of earning dividends and to make capital gains. On the same day, Hexza disposed of 10k shares of Nasdaq-listed chip manufacturer Nvidia Corp for USD4.63m at USD463.20 per share. The average cost was USD93.15 for purchases made in Jun 2017-Feb 2023 thereby giving Hexza a gain on disposal of RM17.85m. The disposal will help the company reduce its exposure to a single high-value counter. The counter closed at 96.5 sen.
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Government consolidates bumiputra investment companies
Permodalan Nasional Bhd’s subsidiary, Yayasan Pelaburan Bumiputera (YPB), will become the umbrella for the bumiputra investment institutions, many of which incurred past losses caused by mismanagement, negligence and procrastination. While the government had to take up RM20b in losses suffered by Tabung Haji, Felda (RM10b) and recently, the Armed Forces Fund Board (LTAT), the institutions should not undertake strategic asset sales. One such entity, Ekuiti Nasional Bhd, a private equity fund manager, will come under YPB for the development of bumiputra businesses with the cooperation of Perbadanan Usahawan Nasional Bhd (PUNB), established to drive bumiputra entrepreneurship. Pelaburan Hartanah Bhd, wholly-owned by Yayasan Amanah Hartanah Bumiputera, will be injected with government land, particularly in Kuala Lumpur, for housing developments. Part of Budget 2024 includes RM1.6b loan facilities and guarantees for micro, small and medium-sized bumiputra entrepreneurs to increase capacity and competitiveness, and as funding for start-ups.
Indonesia launches crude palm oil futures trading
The world’s biggest palm oil exporter launched the crude palm oil (CPO) futures exchange on Fri. Market participants will be attending training first and trading via the exchange, expected to begin on 23 Oct, would be voluntary. Commodities futures regulator BAPPEBTI anticipates that the market will form a reference price by 1Q2024. The Indonesian government had earlier planned to force all CPO exports to route through the exchange to create benchmarks like in Kuala Lumpur and Rotterdam. As most Indonesian palm oil exporters conduct direct sales with buyers without going through an exchange, only 18 companies have so far listed on the exchange. Other medium and small companies will wait and see before deciding to join.
Keppel closes USD575m for infrastructure fund
The Singaporean company’s flagship open-ended fund, Keppel Core Infrastructure Fund (KCIF), accomplished the first closing. The fund’s initial target size is USD2.5b and will focus on defensive infrastructure assets in Asia Pacific’s developed markets. They cover regulated assets with proven operating track records, long concessions and strong counterparts. The large initial capital and co-investment commitments indicate demand for exposure to infrastructure with inflation-protected cash flows via funds managed by trusted partners. The fund is expected to benefit from urbanisation in Asia Pacific with growing demand for infrastructure in the economic and social sectors, energy transition and digital infrastructure. Keppel will share its operational track record to add value in order for the fund to deliver long-term returns to investors.
