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Iskandar Waterfront IPO postponed indefinitely

KUALA LUMPUR: Iskandar Waterfront Holdings Sdn Bhd (IWH), which had postponed what would have been one of the country’s largest initial public offering (IPO) once, has decided to put the plan on the back burner indefinitely, said sources.

IWH had initially targeted to be listed on Bursa Malaysia by end of 2013 or early 2014.

“The [stock] market is still soft. The IPO will be delayed again, but IWH will be listed eventually,” a source close to the company told The Edge Financial Daily.

IWH, a partnership between between Johor state government entity Kumpulan Prasarana Rakyat Johor (KPRJ) and IWH managing director Tan Sri Lim Kang Hoo through Credence Resources Sdn Bhd, is the master developer of the 4,000-acre (1,618.7ha) Danga Bay waterfront city in Johor Baru.

Credence Resources holds a 60% stake in IWH, while KPRJ owns the remaining 40%.

Reuters, quoting sources, had reported in November 2013 that IWH had postponed a US$300 million IPO to the fourth quarter of 2014, a year later than initially planned, on concerns that government measures to rein in property prices would slow demand from well-heeled foreigners.

“It has always been their plan to list the company. It’s about branding. Floating the company can benefit their joint venture partners and also attract investors as well as property buyers worldwide,” the source said.

“The progress of the listing is around 80%. Most of the procedures and preparations are in place,” said the source, adding that the timing of the IPO will very much depend on stock market conditions.

“The current market condition is unfavourable. The sharp fall in oil prices has caused the share price of oil and gas counters to dip, causing the overall market sentiment to be weak,” the source added.

Last year, the benchmark FBM KLCI shed 105.71 points or 5.9% to close at 1,761.25 points on the last day of trading on Dec 31.

When asked whether the IPO plan would materialise within this year, the source said: “There is no timeline fixed yet as much will depend on the market conditions.”

“It would not look good if the share price dips right after it is listed. They will wait for the market to stabilise first,” the source added.

Areca Capital Sdn Bhd chief executive officer Danny Wong Teck Meng said the IPO market for 2015 is expected to “remain soft” just like last year.

“The IPO market was quite soft last year. Nine out of the 14 IPOs dropped below their IPO issue price last year,” he added.

Looking at the statistics, coupled with concerns about falling oil prices having an impact on the Malaysian economy and the implementation of the goods and services tax in April, Wong said now is not a good time to be planning for an IPO.

He expects the equity market to remain soft until oil prices stabilise.  

IWH would have been one of the mega IPOs anticipated for 2015, alongside Edra Global Energy Bhd (formerly known as 1MDB Energy Group Bhd), Malakoff Corp Bhd, Medini Iskandar Malaysia Sdn Bhd, Weststar Aviation Services Sdn Bhd and Permodalan Nasional Bhd’s planned property trust listing despite overall macro concerns. 

 

This article first appeared in The Edge Financial Daily, on January 5, 2015.

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