ICON Offshore Berhad has raised M$944.9 million ($295 million) after pricing its initial public offering at the top end of its M$1.80 to M$1.85 per share range, making it the largest Malaysian IPO this year.
Some 510.8 million shares were priced at M$1.85 per unit on Wednesday afternoon under joint leads Maybank, Credit Suisse and BNP Paribas. The shares represent 43.4% of the company’s enlarged share capital, with 43% primary and 57% secondary.
This final price values ICON Offshore’s market cap at M$2.2 billion, with a p/e ratio of 17.6 times estimated 2014 earnings and 13.1 times 2015 earnings.
Demand for Malaysia’s largest pure-play offshore supply vessel operator was robust, underling the story that investors remain enthusiastic about the country’s oil and gas sector, albeit with concerns over recent volatility.
The institutional book was 15 times oversubscribed, while the retail portion was 9.62 times oversubscribed, according to a banker close to the deal, who noted the book was split fairly evenly between local and global long-only institutional investors and hedge funds.
The book was more than half covered before it opened, with cornerstones pledging to purchase 275 million shares, or 23.36% of the enlarged share capital. The cornerstones — AIA Berhad, Hwang Investment Management Berhad, JF Asset Management, Lembaga Tabung Haji, Maybank Asset Management, Nomura Asset Management, Permodalan Nasional Berhad, Tan Sri Dato Chua Ma Yu and UOB Asset Management — are subject to a six-month lockup.
In addition to being in a promising sector, the ICON deal was appealing as it offers investors exposure to the exploration and production activities of Petroliam Nasional Berhad (Petronas), the country’s national oil and gas company that controls Malaysia’s petroleum resources.
This deal marks the first divestment for Ekuiti Nasional Berhad (Ekuinas), the government-linked private equity group, which has a remit to develop local companies. It will pare down its 88% stake in ICON to 41%.
ICON’s shares priced at a considerable discount to Bumi Armada Berhad, an offshore oil services provider, which priced 878.5 million shares at M$3.03 each in its July 2011 IPO. Bumi Armada’s shares are down 11% so far this year.
Its valuation was high compared to some of its peers, which are trading between 13 and 19 times forward earnings. This is largely due to the company’s tie-up with Petronas – its hydrocarbon arm, Petronas Carigali, is ICON’s primary client and accounted for 71.7% of total revenues in 2013. Another major client is UMW Oil & Gas.
ICON appears to have caught the positive tailwinds following 7-Eleven Malaysia’s successful $227 million flotation, which priced at the top end of the range.
And the plantation arm of Boustead Holdings, meanwhile, aims to raise M$1.1 billion ($324 million) for a 656 million share deal spinoff of its plantation assets later this week.
Malaysian issuers have already surpassed the amount raised in IPOs in 2014 compared with last year, raising $555 million in four deals this year up to June 11, compared to $335 million in five deals the same prior year period, according to Dealogic.
