Sona Petroleum Berhad IPO, Third SPAC in Bursa Malaysia

Sona Petroleum Bhd, the third Special Purpose Acquisition Company (SPAC) after Hibiscus Petroleum and CLIQ Energy is scheduled to be listed in Main Market on 30th July 2013. Similar to previous SPACs Sona Petroleum will be involved in Exploration and Production activities in Oil & Gas but Sona Petroleum will be the largest.

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) of up to 1.1 billion ordinary shares at an IPO price of RM0.50 per share at RM0.01 par value. It comes with 1 free detachable warrant for each share. The warrants will be listed and tradable from the date of listing, with an exercise price of RM0.50.

The IPO comprises of 141 million shares with 141 million free warrants made available for application by the Malaysian public via balloting.

The IPO will raise in between up to RM550 million. The proceed will be used buy oil and gas (O&G) assets in either Southeast Asia, Middle East and selected countries in Africa, namely Algeria, Angola, Chad, Republic of Congo, Ethiopia, Kenya, Mozambique, Nigeria, United Republic of Tanzania and Uganda.

Hong Leong Asset Management, Hong Kong-based hedge fund Segantii Capital, and investment firm Davidson Kempner are among the  cornerstone investors.

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

Main features of this IPO?

1. 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. In this case  Deutsche Trustees. The remaining 10% will be used for operating expenses.
2. 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.
3. The warrants are tradable on listing date. Exercise price is 35 sens with the expiry date of 3 years after listing.
4. The completion of the Qualifying Acquisition (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 will be distributed to shareholders.
5. Sona Petroleum management team led by oil and gas veteran Datuk Seri Hadian Hashim, who started his career with Sarawak Shell and later ventured into oil and gas industry-related businesses from 1995 onwards.
6. The board of directors, the majority of whom will be running the E&P business, has a combined experience of more than 390 years in the industry.
7. Sona’s key management is barred from selling any of its shares until the company generates a year of audited revenue from the commercial production of its qualifying asset.
8. Sona Petroleum will be the largest by a SPAC in Malaysia.

CIMB Investment Bank and RHB Investment Bank are the joint principalmadvisers, joint placement agent and joint underwriters of the IPO while Kenanga Investment Bank & MIDF Amanah Investment Bank are the joint underwriters.

For those who are interested in Sona Petroleum IPO, you may subscribed at ATM machines or via Internet Banking. The subscription period is opened until 12th July 2013 at 5pm. Tentative balloting date is on 17th July while allotment date is on 26th July 2013.

Sona Petroleum Berhad stock name in Bursa Malaysia is “SONA”.

View Sona Petroleum prospectus in Bursa Malaysia webpage.

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