Capital markets executive summary | Fri 17 Nov 2023

Capital markets executive summary | Fri 17 Nov 2023

Siab proposes private placement and rights issue

100m new shares or 20.42% of the existing issued shares will be privately placed to independent investors to be identified. The issue price will be based on the 5-day volume weighted average price of Siab shares immediately preceding the price fixing date, with up to 20% discount and subject to a minimum price of 12 sen. Based on the indicative price of 12 sen, the private placement will raise RM12m. The company’s proposed renounceable rights issue involves 766.52m rights shares and 383.26m warrants on the basis of 13 rights shares for every 10 existing Siab shares held on the entitlement date, and 1 warrant for every 2 rights shares subscribed. The issue price of the rights shares is fixed at 12 sen per rights share. The warrants will enhance the rights shares’ attractiveness and offer the company additional capital when they are exercised. The proceeds are for the proposed acquisition of Taghill Projects Sdn Bhd and for working capital. Siab plans to buy 2m shares or 100% of building construction services company Taghill from Chu Yee Hong, Wong Yih Ming and Yap Kek Siung for RM122m. The purchase price will be paid RM96m in cash and RM26m via the issuance of 200m new Siab shares at 13 sen. Siab’s order book will balloon to RM1.89b from the current RM220.92m after the acquisition. The counter closed at 12 sen.

PLUS’ AAA(s) rating affirmed

MARC Ratings affirmed the rating on Projek Lebuhraya Usahasama Berhad’s RM25.2b Islamic medium term notes (IMTN) programme, which is uplifted 2 notches from the company’s standalone AA rating given the irrevocable and unconditional letter of undertaking from the Ministry of Finance to cover any cash shortfall in meeting a minimum finance service coverage ratio of 2 times. Government support is also evident from the subordination of the RM11b government-guaranteed sukuk to the IMTN programme, the government’s golden share and significant shareholding in PLUS. Traffic volume increased 8% year-on-year in 2022 and 67% year-on-year in 7M2023. Toll revenue climbed 6% to RM1.9b. Traffic volume growth should return to the historical rate of 1%-1.5% per annum. The company’s RM3b cash at end-Jul 2023 and stable cashflows should cover commitments including capex and financial obligations in the next 12 months. PLUS can adjust its capex to maintain its credit metrics. The company also has the flexibility to extend the IMTN repayment beyond 2052, up to the end of the concession period in 2058.
Would you like us to email you when our latest executive summary is available?

Dayang Enterprise early redeems RM220.5m sukuk

The oil and gas services company redeemed the last 2 series of its sukuk murabahah earlier than the maturity dates in 2024 and 2025 with internal funds and fresh borrowings. The total amount for the 2 series was RM313.95m, but several tranches had been redeemed previously with proceeds from a private placement exercise and with internally generated funds. The sukuk was initially issued in 2019 in 6 series with a nominal value of RM682.5m as part of a debt-restructuring exercise to reschedule the company’s payment obligations and strengthen its financial position. The counter closed at RM1.83.

Commonwealth Bank sells Indonesian subsidiary to OCBC

Commonwealth Bank of Australia (CBA) will sell its 99% interest in PT Bank Commonwealth (PTBC) to PT Bank OCBC NISP for AUD220m. OCBC will buy the balance 1% from PTBC’s other shareholders. CBA and Australia’s other big banks have been pulling out of offshore and non-banking financial services businesses since a regulatory crackdown 6 years ago. Another reason is challenging demand as interest rate hikes force home loan borrowers, their core customers, to shop around for better deals. OCBC Group CEO Helen Wong said in 2022 that Singapore’s 2nd biggest bank is on the look out for acquisitions in Indonesia to speed up growth. PTBC concentrates on retail and small and medium-sized enterprises by providing banking and wealth management products. There is hardly any overlap in customer relationships between OCBC Indonesia and PTBC. The sale should conclude in 2Q or 3Q2024.

Carlyle lowers Asia fundraising target in soft market

The US investment firm shrunk by 30% its 6th Asian private equity fund from the original USD8.5b to USD6b amid the global economic slowdown and geopolitical tensions. It launched the fund in mid-2022 but has raised less than USD3b. The lacklustre interest could be blamed on the recent poor performance of Carlyle funds. Private equity investors usually reinvest returns from previous investments. With the lower target, the company expects final close in 3Q2024, although it is uncertain if it has reached 1st close thereby enabling it to start investing. Private equity firms are struggling to cash out on assets with the ongoing Middle Eastern and European conflicts, rising inflation and higher interest rates, all of which investors anticipate will depress global economic growth next year. Funds raised USD299b in 2021, halved to USD154b in 2022 and again to USD73b this year. Private equity firms made USD15.6b total exits in Asia, down 82% year-on-year. There has been zero US dollar denominated China-focused buyout fund raised this year because of China’s economic slowdown and tensions with the US.