Petronas plans for petchems IPO

MALAYSIA'S Petronas has filed a draft prospectus for an initial public offering of its entire petrochemicals business, moving a step closer towards creating country's second-largest IPO after Maxis.

The draft prospectus on the Securities Commission website did not state how much Petronas Chemical Group is seeking to raise, but banking sources have put the value of the firm at over US$2 billion.

Petronas Chemical Group's IPO is one of two offerings to be launched by government-run Petronas in response to Prime Minister Najib Razak's call to reduce state ownership in the private sector and boost liquidity in the stock market.

But according to the draft prospectus, Petronas will remain a controlling shareholder of the firm. Under the terms of IPO, Petronas Chemical will buy a Malaysian port from Petronas in exchange for almost half of its authorised share capital of 15 billion shares.

That has raised investor concerns that the firm will remain an illiquid stock like many of the government-linked companies that make up more than half of the benchmark FTSE Bursa Malaysia KLCI Index.

"Nothing appears to have changed with Petronas set to hold a sizable chunk of the new company," said a manager of a fund based in Kuala Lumpur who declined to be named as he is not authorised to speak to the media. "They (Petronas) may want to safeguard the company because of the uncertain financial markets but a Petronas Chemical IPO should bring in some interest. They appear to be a little clingy."

Petronas Chemical's IPO timeline has not been set although IFR Asia reported that pre-marketing was likely to begin next month. Its joint global co-ordinators and bookrunners are CIMB, Deutsche Bank and Morgan Stanley. Reuters