Petronas Chemicals Group (PCG) has received orders for about 21 times the shares available in its RM12.8 billion initial public offering (IPO) for institutional offering. The retail offering of 293 million shares was oversubscribed by 2.5 times.
Shares were priced at RM5.20 each for institutions while individual investors get 3 percent discount at RM5.05. Demand for the shares exceededing the supply, with the institutional offering attracting orders for about RM92.6 billion worth of shares. The IPO values Petronas Chemicals at RM38.8 billion, or 16.3 times profit, a 38 percent premium to the industry median.
PCG, formed through the combination of more than 20 companies, offer 2.48 billion shares for a 31 percent stake, Petroliam Nasional as its parent company will get 72 percent of the proceeds, while the chemicals unit plans to use the remainder to build facilities and fund acquisitions.
PCG intends to pay 50 percent of annual earnings as dividends to shareholders.
PCG will be the fifth largest constituent by market capitalization of an estimated RM40 billion after its initial public offer on 26th November 2010. It may replace gaming company Berjaya Sports Toto Bhd in FBM KLCI after its listing.
The Employees Provident Fund and Kumpulan Wang Persaraan buy 18 percent of the offering as strategic investors.
The IPO of PCG is part of Prime Minister Najib Razak’s plan to attract more overseas investment by selling state-owned assets. The government also eased rules last year that forced publicly traded companies to set aside 30 percent of their equity to ethnic Malays who form the majority of the population.
Last month, Malaysia Marine & Heavy Engineering Holdings Bhd (MMHE) rig-building arm of Petronas’s MISC Bhd., raised about RM2 billion last month in IPO. Institutions placed orders for 27 times the number of shares they were allocated.