A growing list of IPOs

THE good news is that the initial public offerings (IPOs) market has seen strong signs of revival with 10 new listings on Bursa Malaysia so far this year with more in the pipeline.

The bad news is that the large ones aren’t doing that great for now.

And it is not just new entry Lotte Chemical Titan Holdings Bhd whose share price is trading below its listing that has stuck out like a sore thumb.

Stocks that are trading below their offer prices includes notable names such as UMW Oil & Gas Corp Bhd and Malakoff Bhd. If one stretches the period to 2012, Felda Global Ventures Bhd also fell into the category of large IPOs that had not done well.

Against this challenging backdrop, it would be interesting to see how much investors are willing to pay for shares in Edra Energy Bhd, the second largest power producer after Malakoff.

Edra, which was sold by 1Malaysia Development Bhd to China General Nuclear Power Corp in 2015, is said to be looking to raise around RM5bil.

The original owners of Edra had unsuccessfully tried list the company since 2012 but failed. Early this year, Edra withdrew a request for proposal from bankers shortly after it made the request.

Now, there are reports that at least two local investment banks and a foreign entity have been chosen to lead the listing.

Edra will be competing for investors’ attention in a market bursting with potential of top quality offerings.

News reports this week suggested Prudential Plc and Great Eastern Holdings Ltd as among insurance firms looking to pare down their local stakes to the Malaysian public in a bid to comply with Bank Negara’s foreign ownership cap.

The report indicated that foreign insurers have until the middle of 2018 to reduce their holdings in local firms to 70%. In any circumtances, insurance companies certainly command a higher degree of charm as investment prospects compared to electricity producers.

There is also Sime Darby Bhd’s plans to split itself into three listed entities by the end of the year.

This will separate its core plantation unit and sprawling property assets from the parent company, allowing for better price discovery of its assets.

There is also talks that QSR Brands Bhd, the fast food operator, is seeking to relist its shares, while U-Mobile Bhd and edotco Group Bhd, the company that holds the telecommunication towers under Axiata Bhd, are viewed as potential newcomers to the market.

Based on previous listing, these companies would be asking for premium valuations by virtue of their size. Let’s hope this time around the valuations are more subdued as investors are getting savvy.