After the initial slowdown in 2020 due to the Covid-19 pandemic, the Malaysian initial public offering (IPO) market has seen a resumption of activity to pre-pandemic levels, registering 30 IPO listing interests in 2021 against the 19 from 2020, with many more expected to launch in 2022.
The low interest rates, blanket 6-month loan moratorium, and strong liquidity of institutional investors from reduced statutory reserve requirement ratio plus the convenience of online broking all helped to drive the performance of IPOs amid the pandemic and gave many companies the confidence to go public.
The expected easing of the pandemic in the near future also contributed to the positive outlook for IPOs, which saw increased participation from local retail investors adding to the vibrancy of the marketplace.
Amid this scenario, a few recent IPOs stood out in terms of their performance:
ACO Group Berhad successfully made its IPO debut on the ACE Market of Bursa Malaysia in March 2020 at the onset of the pandemic. ACO Group successfully raised RM16.2 million from its IPO issuance of 58.0 million new shares at an issue price of RM0.28, which has been oversubscribed by 15.53 times ahead of the listing.
The proceeds from its IPO were used to set up new sales outlets and lighting concept stores, a new head office and distribution centre in Johor, purchase new trucks and fund the upgrade of its information technology (IT) system, working capital and listing expenses.
As one of the best performing IPOs in recent years, the success of Mr DIY is arguably one of the reasons for the increased interest in IPOs among ambitious companies and retail investors alike.
The IPO of Mr DIY managed to raise RM1.5 billion upon its debut on Bursa Malaysia’s Main Market on 26 October 2021, making it the largest IPO in the last three years at that time and the country’s biggest listing of a retailer. It was also the first IPO to surpass the billion-ringgit threshold in 2021, giving it a market capitalisation of RM10 billion upon listing based on its IPO price of RM1.60 per share of an enlarged share base of 6.28 billion.
Some 410.15 million shares were traded upon its listing, and the counter closed at RM1.75 on its maiden day of trading, representing an increase of 15 sen or 9.4% from its IPO list price of RM1.60. The stock continued to perform well, with an 85% gains from its listing by the year’s end, and counts Aberdeen, BlackRock, Affin Hwang, AIA, JP Morgan Asset Management, Eastspring, Hong Leong Assurance and other stalwarts among its cornerstone investors.
Following hot on the heels of Mr DIY’s IPO was the launch of CTOS Digital Berhad on the Main Market of Bursa Malaysia, which debuted with an opening price of RM1.50 and ended the day trading 47% higher at RM1.62 or a 60% premium over its IPO listing price of RM1.10.
Its share price exceeded all analysts’ target prices, and the shares of its IPO were oversubscribed by 27.57 times, helped along by its appealing target dividend payout ratio of 60% of CTOS’ profit after tax and minority interests (PATAMI).
The listing exercise raised a total of RM1.2 billion and garnered 23 cornerstone investors including heavyweights such as Employees Provident Fund Board, Permodalan Nasional Bhd, Aberdeen Standard Investment, AIA, Eastspring Investments, FIL Investment Management and JP Morgan Asset Management.
The strong interest from institutional investors speaks to the growth potential of CTOS, which stands to benefit from a growing customer base in the under-penetrated credit reporting market of Malaysia.
DynaFront Holdings Berhad rang its gong at the LEAP Market of Bursa Malaysia on 23 July 2021, debuting at 23 sen per share which was 2 sen or 9.52% higher than its offer price of 21 sen per share.
The IPO was completed to the amount of RM2.52 million, raised through a private placement of 12 million new shares making up 16.67% of the company’s enlarged share capital.
Proceeds raised from the IPO will support the company’s plans to strengthen its presence in Indonesia and establish new technical support and marketing teams in one of the largest and fastest-growing markets for the life insurance industry.
Although Singaporean startup Grab is not technically a Malaysian company, the IPO of this Southeast Asian unicorn co-founded by Malaysian entrepreneurs Anthony Tan and Tan Hooi Ling was possibly the most anticipated IPO of the year for Malaysians, making it worthy for inclusion on this list.
Despite closing its first day trading on Wall Street down nearly 21%, its December 2021 debut on New York’s Nasdaq Stock Market through a USD40 billion merger with special-purpose acquisition company (SPAC) Altimer Growth Corp still managed to raise a whopping USD4.5 billion, making it the largest IPO by a Southeast Asian company in U.S. history.
Grab’s shares saw support and subscription from big name investors including Fidelity, BlackRock, T. Rowe Price, Abu Dhabi sovereign wealth fund Mubadala, and the Singapore Government’s investment arm Temasek.
It’s IPO success goes to show how far this startup has come since its launch as MyTeksi in Malaysia less than a decade ago, using the USD25,000 prize money won with the founders’ ride-hailing idea in Harvard Business Schoold’s New Venture Competition in 2011.
Senheng’s IPO was oversubscribed by 10.4 times prior to its launch on the Main Market of Bursa Malaysia on 25 January 2022 – the first Main Market listing for the year.
With an initial offering price of RM1.07, Senheng received a total of 16,548 applications for 343.2 million shares with an aggregate value of RM367.3 million for the public portion of the group’s IPO comprising 30.0 million shares out of 250.0 million new shares issued.
Although its shares opened at 90 sen a share, 17 sen or 15.89% lower than its listing price, Senheng’s IPO successfully raised a total of RM267.5 million, which will go towards funding the company’s growth strategies and aggressive expansion plans.
While these represented only some of the stronger debuts for high-growth potential companies on the IPO market, the route to IPO for many of these featured companies would not have been possible without the help of venture capital and private equity firms.
Grab was nurtured by the Malaysian government’s Cradle Fund in its early years when it was still known as MyTeksi, while Mr DIY and CTOS are both backed by one of Malaysia’s leading private equity firms. These companies have benefitted handsomely, not just in terms of financial growth through the IPO, but also the injection of business expertise, growth resources and strategic connections offered by venture capital and private equity firms that has led to their current success.
The market is optimistic that more IPOs will be on the horizon for the local exchange in 2022, with the introduction of the Capital Market Masterplan 3 by the Securities Commission of Malayisa, digitalisation of operations, and the overall recovery of the economy from Covid-19 boding well for IPO activity in the coming year.
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