IPOs draw positive response
SO far this year, we saw two of the largest initial public offerings (IPOs) in Malaysia in Westports Holdings Bhd and UMW Oil & Gas Corp Bhd, which have drawn much positive interest from investors, judging from the oversubscription rate.
The total initial public issue was about RM2 billion for Westports and about RM2.36 billion for UMW Oil and Gas. These could boost confidence for other IPOs to tap the market after a lull since last year.
Malaysia had one of the world's largest IPOs last year with RM29.2 billion raised. In the pipeline are the listings of Iskandar Waterfront Holdings and 7-Eleven Malaysia.
Some genuine concerns have come from minorities, especially retailers, on the same matter again, i.e. being "left-out" as they are only offered two per cent of the enlarged share capital for UMW Oil and Gas as dictated by regulation.
This is despite an oversubscription many times over for the retail portion.
As for Westports, the retail portion is more generous. But this IPO is a 100 per cent offer for sale of the existing shares, which means all IPO proceeds will go to existing shareholders and no money in the capital-raising exercise will go into the firm.
Yet, the listing fee, amounting to millions, will be borne by the firm.
Nearer home, the decision by Chinese e-commerce company Alibaba Group Holding Ltd to pursue its IPO in the United States (and not Hong Kong) is a sign that the HK regulators are standing firm in their plan to promote corporate governance.
The loss to the arrangers could amount to more than US$15 billion (RM47.25 billion), while the HK Exchange would have counted the world's third-most valuable Internet company after Google and Amazon (and nearly on par with Facebook) on its list had the negotiations not apparently foundered over governance concerns. Rita Benoy Bushon is MSWG CEO