Tune Ins Holdings, which is partly owned by AirAsia, has raised M$283.8 million ($92 million) from an initial public offering in Malaysia, after fixing the price slightly below the midpoint of the indicative range, a source said yesterday.
According to Dealogic, this is the first IPO in Malaysia this year. It comes after the country became a bright spot for IPOs last year supported by ample domestic pension money. Malaysian IPO volumes reached $7.5 billion in 2012, boosted by a few billion dollar deals, up from $2.3 billion in 2011, the Dealogic data show.
Tune Ins’ order books were closed on Monday (February 4), two days earlier than initially planned due to strong demand, after opening on January 23. The retail offering also ran from January 23 until Monday this week. The stock is set to start trading on February 22.
The deal drew very strong demand from both domestic institutions and international long-only investors, the source said. There was demand from around 80 accounts, and the top 10 accounts received around 60% of the allocations, the person noted. The institutional and retail tranches were both multiple times covered.
Tune Ins sold 210.2 million shares, or 28% of the enlarged share capital, at M$1.35 each. Some 68% of the deal were primary shares and the remaining 32% were secondary. The offer price represented a 2013 price-to-earnings ratio of about 15.5 times, according to another source.
The shares were marketed in a range between M$1.20 and M$1.55, which could have allowed the company to raise $81.2 million to $104.9 million. The price range translated into a 2013 P/E multiple of between 13.8 times and 17.8 times.
Of the deal size, 80.3%, or 168.9 million shares, were targeted at institutional investors, while the remaining 19.7%, or 41.3 million shares, were for retail investors, ethnic Malay investors and employees and directors. There was no change to the institutional and retail split following the pricing.
There is a greenshoe option of up to 15% that could increase the deal size to about $105 million.
The company does not have any direct comparables as it is more a marketing company than an insurance company, but investors likely looked at other insurance plays in the region for comparison, sources said.
According to the company’s prospectus, Tune Ins is an insurance product manager for its online partners, currently AirAsia, Tune Hotels and AirAsia Expedia. Its subsidiaries are insurance providers or underwriters, directly or via reinsurance, of general and life insurance products across the Asia-Pacific region.
Its online insurance business comprises primarily its travel protection plan, but it also includes other online insurance products, such as the AA lifestyle protection plan, which is a product offered to customers of AirAsia in Malaysia, Thailand and Indonesia. In 2012, Tune Ins facilitated the issuance of about 6 million travel protection plan policies to AirAsia customers, up from 5.6 million policies in 2011.
Prior to the IPO, Tune Ins was 20% owned by AirAsia, a Malaysia-based low-cost carrier, while the remaining 80% was owned by Tune Money, according to the company’s website. Tune Money is a universal financial services company offering affordable prepaid and loyalty cards as well as life and general insurance products, it says. Tony Fernandes, who is the group chief executive director of AirAsia, is also co-founder and executive chairman of Tune Group.
Tune Ins says it believes its exclusive relationship with AirAsia places it in a unique position to benefit from the growth in travel within the Asia-Pacific region and particularly the increasing number of AirAsia’s customers.
It also said in the prospectus that it is actively pursuing acquisition targets in other Southeast Asian markets, particularly Indonesia and Thailand. These markets are fast growing and sizeable, while their insurance needs are underserved, it noted.
The Tune Ins group booked M$34.2 million in net profit for 2011, up from M$26.4 million in 2010 and M$17.2 million in 2009.
The company plans to use the proceeds for the repayment of bank borrowings, strategic investments, working capital and listing expenses.
Tune Ins explained in the prospectus that it depends on AirAsia for a substantial portion of its business, and it will be adversely affected by a decline in the airlines’ customer volumes. The travel protection plan, which is offered to the customers of AirAsia, contributed 49.9% of its pro forma profit before taxation in 2011, from 62.5% in 2010, it said.
CIMB and CLSA were global coordinators for the deal. Kenanga, RHB and Standard Chartered joined them as bookrunners.
Sunway Reit
Elsewhere in Malaysia, Sunway Real Estate Investment Trust raised M$320 million (M$103 million) from a placement of new units yesterday, according to a source.
The trust, which is the largest Reit in Malaysia, was seeking to raise up to M$320 million by offering primary units at a price between M$1.46 and M$1.49 each, according to a term sheet.
The deal was priced at the top of the range at M$1.49, which represented a 3.2% discount to Monday’s close of M$1.54, the source said. Based on the final price, it ended up selling approximately 214.8 million new units.
Trading in the stock was suspended yesterday.
The order book was multiple times covered across the price range, with lumpy orders from existing domestic and international shareholders. Long-only investors accounted for about 85% of the demand, according to the source.
The company plans to use the net proceeds for the repayment of bank borrowings, as well as for acquisitions.
Credit Suisse, HSBC, Maybank and RHB were arranging the deal.
Meanwhile in Hong Kong, PanAsialum had a difficult debut yesterday as investors took profits on recent gains, pushing the Hang Seng Index 2.3% lower. Other Asian markets also slid.
PanAsialum, a Chinese manufacturer of iPad casings and other aluminium products, raised $160 million from an IPO late last month after fixing the price above the mid-point of the indicative range. The 10% retail tranche was more than 50 times subscribed, which triggered a clawback that boosted this portion of the deal to 40%. Accordingly, the institutional tranche was reduced to 60% from 90%.
The stock opened down nearly 5% in its trading debut yesterday, before ending the day 13.1% below the IPO price at HK$3.59.
