Capital markets executive summary | Tue 24 Oct 2023

Capital markets executive summary | Tue 24 Oct 2023

Carlo Rino adjusts exit offer price for transfer to ACE Market

The company, which designs and markets women’s handbags, footwear and accessories, is transferring its listing from the Leading Entrepreneur Accelerator Platform (LEAP) Market to the ACE Market. The exit offer price was adjusted from 23 sen to 22.5 sen after deducting the 0.5 sen interim single-tier dividend paid on 15 Sep 2023. The exit offer price is set by the joint offerors undertaking a voluntary general offer to acquire the remaining 383.58m shares or 47.61% of the total issued shares at 11 Aug not held by them. The joint offerors are Datuk Seri Chiang Fong Yee, Chiang Sang Sem and Freeway Team Sdn Bhd (FTSB). Fong Yee holds 31.9% direct interest. Sang Sem, group executive chairman of Bonia Corp, is Fong Yee’s father and owns 6.71% directly. FTSB, wholly-owned by Sang Sem, has 13.78% direct interest. The company’s transfer to the ACE Market entails an initial public offering (IPO) and an offer by Fong Yee to sell existing shares to non-bumiputra investors representing 26.58% of the enlarged shares at a price to be determined. Carlo Rino closed at 23 sen.

DNeX partners Chinese and Saudi IT companies for smart city projects in Saudi Arabia

Dagang NeXchange Bhd (DNeX) signed a joint venture agreement with Zhongheguoji Construction Group Co Ltd to set up a joint venture enterprise (JVE) that will access smart city technology from Chinese technology partners such as Tencent and Tsinghua University. After that, the JVE will partner other Chinese entities specialising in supply chain and logistics, intelligent transportation, electrical manufacturing, clean energy, data centres and equipment. DNeX’ subsidiaries, SealNet Sdn Bhd and DNeX MENA Sdn Bhd, signed a collaboration agreement with Saudi-based Ajlan & Bros Information Systems Technology and Zhongheguoji to explore opportunities in offering smart city and other solutions in commercial projects in Saudi Arabia. DNeX is drawn to the market potential and the partnership will leverage on the digital transformation trend. The collaboration is an extension of the company’s ongoing efforts to bid for IT projects, particularly smart city infrastructure, e-government and digital commerce. DNeX closed at 41.5 sen.
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Kapar Energy Ventures’ AA+ rating affirmed

MARC Ratings affirmed the rating on the RM470m sukuk ijarah, a 2-notch uplift from the company’s AA- standalone rating due to support from AAA-rated parent Tenaga Nasional Berhad (TNB), which owns 60%. KEV runs the 2,200MW Kapar power station. Repairs for its boiler tube leakage at generation facility 3 in Feb 2023 caused the unplanned outage rate (UOR) to exceed the 6% limit in the power purchase agreement (PPA) and RM11.2m was deducted from its capacity payments (CP) in 1H2023. KEV was also not able to fully pass through its fuel cost in 1H2023 as coal prices have fallen since early 2023 resulting in a lower applicable coal price (ACP) used to calculate energy payments (EP) compared to its average coal cost. In 2022, there was a full pass through of fuel costs when the ACP was higher than the average coal cost. The higher EP pushed pre-tax profit up from RM59.5m in 2021 to RM390.2m in 2022. KEV received full CP of RM440.3m in 2022 with the UORs within the PPA limit. In the base case projections, average finance service coverage ratio will be 2.21 times and minimum will be 1.89 times. TNB closed at RM9.85.

Chevron acquires Hess in USD53b merger

Despite European rivals shifting their attention towards renewable fuels, US companies are doubling down on lower-risk fossil fuels. The deal strengthens the position of Chevron, the number 2 US oil and gas company against the bigger Exxon, which sprinted ahead after taking over Pioneer Natural Resources and Denbury in USD64b combined transactions. Chevron offered 1.025 of its shares for each Hess share or USD171 per share, for a 4.9% premium. The total value is USD60b with debt. The merged entity will save USD1b in cost within a year and will expand Chevron’s oil production in less risky regions like the US Gulf of Mexico and the Bakken shale in North Dakota. Chevron will also turn into a partner with Exxon-CNOOC in Guyana, which had more than 11b barrels of oil and gas discoveries since 2015. Hess owns 30% of the consortium currently producing 380k barrels per day rising to 1.2m barrels by 2027. Chevron will increase its share repurchase programme by USD2.5b to the top of its USD20b annual range. Morgan Stanley was lead adviser to Chevron and Goldman Sachs was lead adviser to Hess.

Goldman Sachs raised USD4b for infrastructure fund

The new mid-market infrastructure fund, West Street Infrastructure Partners IV, drew commitments from institutional investors, high-net worth individuals and Goldman staff. Despite private equity fundraising weakening, investors are bullish towards assets that can give inflation-beating returns such as toll roads and power. Goldman Sachs Asset Management (GSAM) has invested in the digital, transport and logistics, social infrastructure and energy transition sectors. In particular, the energy transition theme creates investment opportunities in every sub-sector of infrastructure. The fund has committed USD2.3b to 8 companies, including the privatisation of Finnish school construction firm Adapteo Oyj, Norwegian aquaculture company Frøy ASA, US renewable natural gas plant operator Synthica Energy and utility-grade battery storage developer GridStor. Last month, GSAM raised USD1b for Vintage Infrastructure Partners I, an infrastructure secondaries fund. Infrastructure deals are more resilient than other areas, although volatile markets, tighter financing conditions and a widening bid-ask spread are making things more challenging. GSAM avoids competitive auctions and looks for opportunities with relative value.