Thursday, January 20

Hibiscus sets precedence in new listing category on Bursa

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IPO LAUNCHING: Dr Pereira (third left) hands the prospectus to Lee (third right) during the launching ceremony. Looking on (from left) are Phang from Hong Leong Investment, Hibiscus' head of petroleum engineering Dr Pascal Hos together with its chief financial officer Joyce Vasudevan and petroleum economist Iwan Jefry A Majid.

PETALING JAYA: Hibiscus Petroleum Bhd (Hibiscus) is set to become a pioneer in public listing exercise here by being the first special purpose acquisition company (SPAC) to debut on Bursa Malaysia.

Slated for undertaking start-up oil and gas exploration and production (E&P) operations, Hibiscus issued its prospectus here yesterday; thus launching its initial public offering (IPO) and opening its application for shares to public investors.

Under the IPO exercise, the company would be opening a public issue of new ordinary shares through placements to selected investors and applications by the Malaysian public, comprising between 200 million and 400 million new ordinary shares, alongside a ‘sweetener’ of one warrant-A for each share subscribed at an issue price of RM0.75 per share.

Total proceeds to be raised under Hibiscus’ IPO would be expected at between RM150 million to RM300 million.

“When we first started, we really could not expect how the market reception would be for a SPAC,” said Hibiscus managing director Dr Kenneth Gerard Pereira to the media during the launching briefing here.

“So, under the Securities Commission of Malaysia (SC) guidelines, the minimum threshold in terms of raised proceeds from an IPO is set at RM150 million. But with a flexible structure, we are targeting between RM150 million to RM300 million post-IPO.”

Hibiscus had submitted its application to the SC in December last year before obtaining approvals from both the commission on April 20 this year, and Bursa Malaysia earlier this month. In line with its pioneer status, Bursa Malaysia had allocated a special counter on the Main Board for listing of SPACs.

“We are the first SPAC to be listed on the Main Board in the country. Apart from that, we are also the first Malaysian independent E&P company to be listed on Bursa. There have been some companies that have undertaken E&P as part of their businesses, but none has ever been listed.

“This is our proposition to investors,” added Dr Pereira.

In definition, a SPAC is a company with no operations or income-generating business at the point of IPO but undertakes the exercise for the purpose of raising funds towards acquiring operating companies, businesses or assets – known as qualifying acquisitions (QAs). Under the SC guidelines for SPACs, 90 per cent of proceeds would be placed in a trust account managed under an appointed custodian.

A SPAC would also have to complete a QA within three years after listing. Failure to do as such would result in the liquidation of the company.

However, under the SC guidelines, public investors would be guaranteed the return of at least 90 per cent of their investments upon the happening of such circumstances.

“This are the safeguards that the SC has set for investors,” Dr Pereira pointed out.

For Hibiscus, Deutsche Trustees Malaysia Bhd had been appointed as the custodian, while Hong Leong Investment Bank Bhd (Hong Leong Investment) would be the principal adviser, placement agent and managing underwriter for the IPO. Listing date would be slated for this July 25, barring unforeseen circumstances.

Post-listing date, Hibiscus would work towards the acquisition of businesses or assets that should establish it as a junior independent oil and gas E&P player in the near- to medium-term.

Commenting further, Dr Pereira expressed his hope that as a secondary spin-off, Hibiscus would be encouraging more parties to establish SPACs here, replicating similar practices in overseas markets such South Korea, Germany and the US.

“While being the first to be listed under the new SPAC category on the board, it will be ‘lonely’ for us there,” Dr Pereira joked. “But with us being there, we hope that that our efforts will be emulated by other entrepreneurs who will use the comprehensive package of safeguards and ‘sweeteners’ offered by our regulatory authorities (SC and Bursa Malaysia) to create value; at the same time, introduce a new class of companies on the stock exchange.”

Also present at the prospectus launching were Hong Leong Investment’s managing director and chief executive Lee Jim Leng and the investment bank’s co-head of equity markets Phang Siew Loong.