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Sona Petroleum expects to be largest SPAC on Bursa upon listing

Posted on May 3, 2013, Friday

KUCHING: Sona Petroleum Bhd (Sona Petroleum) expects to be the largest special purpose acquisition company (SPAC) in the country upon its listing soon.

To note, there had already been two other successful SPAC listings, namely Hibiscus Petroleum Bhd and Cliq Energy Bhd, both of which are also in the oil and oas (O&G) sector.

Unlike its peers, Sona Petroleum differentiates itself in the regions it target, namely Southeast Asia (SEA), Middle East and Africa for its intention to acquire assets in the exploration and production (E&P) phases of the O&G value chain.

Datuk Seri Hadian Hashim, managing director of Sona Petroleum in a press release yesterday said, “Selection of who sits on your board and management team for a SPAC is actually quite critical.

“As a SPAC has no business or operations at IPO stage, the team of board of directors and key management is what investors will bank on for a SPAC.”

He added, “Sona Petroleum’s team is a combination of international and regional experts in their own field, namely, oil and gas, legal and corporate finance and these are good components of what is needed for a business.”

Hadian said that Africa was a significant player in the global oil market with an estimated eight per cent of the world’s oil reserves while the Middle Eastern nations controlled an estimated 48 per cent and 38 per cent of global proven oil and natural gas resources respectively.

To note, Malaysia is the only country in SEA that permits the listing of SPACs, although there had already been many such listings in the US and Europe.

One of the main purposes for a SPAC listing is to enable the investing public to invest in sectors and businesses which are unique; and although more speculative, should offer a higher return.

A SPAC is a company which has no operations or income generating business at the point of IPO but undertakes an IPO for the purpose of raising funds to acquire operating companies or assets, other known as ‘Qualifying Acquisition’. SPACs are tightly regulated by the Securities Commission.

Going forward, Infield Systems, an independent market researcher expected offshore capital expenditure to grow at 7.4 per cent compounded annual growth rate (CAGR) from 2013 to 2017.

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