Hibiscus Petroleum Berhad IPO, First SPAC in Bursa Malaysia

Hibiscus Petroleum Bhd, the first Special Purpose Acquisition Company (SPAC) to be listed in Main Market on 25th July 2011.

SPAC is a company which has no operations or income generating business at the point of IPO but undertakes an IPO with the intention of acquiring operating companies/businesses with the proceeds raised from the IPO.

The Initial Public Offering (IPO) consists of 200 to 400 million ordinary shares at an IPO price of RM0.75 per share at RM0.01 par value. It comes with 1 free detachable warrant for each share. 10 million shares are offered to Malaysian public.

The warrants will be listed and tradable from the date of listing, with an exercise price at a discount of approximately 33% to the issue price of RM0.75 per share.

Upon the listing, Hibiscus Petroleum will work towards the acquisition of businesses or assets that would establish it as a junior independent oil and gas exploration and production (E&P) player in the near to medium term.

More information regarding the company can be found in Hibiscus Petroleum webpage.

Hibiscus Petroleum does not intend to pay dividends prior to the completion of the Qualifying Acquisition (QA). The company has not generated any revenue since it has not commenced business operations.

Main features of this IPO?

1. Investor Protection – At least 90% of the IPO proceeds will be placed in a trust account managed by an independent custodian which is a trust company, a licensed bank or merchant bank.
2. Shareholders who vote against a proposed Qualifying Acquisition (QA) are entitled to receive, in exchange for their securities, a pro rata portion of the amount held in trust account (being 90% of the IPO proceeds) if the QA is approved. Hence, the downside risk prior to Qualifying Acquisition (QA) is limited with the refund flexibility of 90% of an investor’s IPO subscription plus interest (net of distribution/liquidation expenses).
3. The downside risk may be further mitigated by the trading of warrants from the date of listing as this IPO comes with a sweeter of 1 free detachable warrant for each share.
4. The warrants are tradable on listing date. Exercise price is 50 sens – a discount of 33% to the issue price of 75 sens.
5. The completion of the QA is within 3 years from the date of listing. If it fails to complete a QA within this time frame, the company will be liquidated and the amount held in trust account (net of taxes and liquidation expenses) will be distributed to shareholders.
6. Opportunity to invest in a listed oil and gas Exploration & Production company at entry price.
7. Board and Management team have extensive experience and relevant skills.

Hong Leong Investment Bank is the Principal Adviser, Placement Agent and Underwriter of the IPO while Deutsche Trustees Malaysia Berhad is the trustee.

For those who are interested in Hibiscus Petroleum IPO, you may subscribed at ATM machines or via Internet Banking. The subscription period is opened until 13th July 2011 at 5pm. Tentative balloting date is on 15th July while allotment date is on 19th July 2011.

Hibiscus Petroleum Berhad stock name in Bursa Malaysia is “HIBISCS”.

View Hibiscus Petroleum prospectus in Bursa Malaysia webpage.

What do you think about Hibiscus Petroleum IPO? Are you going to subscribe?