The chemicals arm of Malaysian state energy firm Petronas raised $4.1 billion on its stock market debut yesterday, in Southeast Asia’s biggest ever initial public offering.
Petronas Chemicals Group opened at 5.71 ringgit ($1.82), a 9.8 per cent premium on its institutional price and at the top end of forecasts, reflecting strong demand for the region’s IPOs. The stock touched 5.72 before ending the session up 2.1 per cent at 5.31 ringgit.
The sale eclipses the $3.3 billion launch of Malaysian mobile operator Maxis last year, and follows the successful offering of AIA, the Asian unit of troubled US insurer AIG, and Agricultural Bank of China, which both raised more than $20 billion.
Investors were attracted by a robust earnings outlook for the firm, a unit of Petroliam Nasional (Petronas), Malaysia’s only Fortune 500 company.
Petronas’ petrochemicals business includes 22 companies that produce chemical compounds, fertilisers, and industrial and specialty chemicals.
The sale is part of Prime Minister Najib Razak’s ambitious Economic Transformation Programme (ETP), a blueprint to revitalise the economy over the next decade and achieve developed-nation status by 2020.
The government is trying to energise the private sector by divesting some stakes in government-linked corporations, as well as adding much-needed depth and liquidity to the Malaysian bourse.
Yeah Kim Leng, group chief economist with RAM Holdings, said Petronas Chemicals was drawing both long-term investors and the short-term “hot money” which is flowing into Asia’s more vibrant economies.
“Index-linked funds will have active interest in the stock, which will attract both domestic and foreign investors. It is an iconic stock which investors must have in their portfolio,” he said.
George Ratilal, executive vice president for finance at Petronas, was coy about speculation that Petronas, which has listed two subsidiaries this year, is preparing for further big sales.
“There is always speculation about this. Petronas is a large group. People look at some of our companies that we have which they think are right for flotation,” he said.
“We are basically fundamentally driven. If we have companies which we think are ready, that can go to the market, that can be sustainable as a listing company, then we will look at it. And it has to be a balance of what is right for Petronas and what is right for the company itself.”
Analysts said the latest offering was well timed, coinciding with a surge in global capital flows towards fast-growing emerging economies.