Westports' IPO mooted by Khazanah

KUALA LUMPUR (Sept 23, 2013): Westports Holdings Bhd's plan for an initial public offering (IPO) was initiated by state investment company Khazanah Nasional Bhd as part of the government's move to push government-linked companies to divest commercial holdings to attract foreign investors and boost stock market liquidity, said Westports CEO Ruben Emir Gnanalingam (pix).

"Khazanah has been pushing for an IPO (of Westports) for a long time. They were the ones that initiated the idea or discussions a few years ago. They felt more (Malaysian) companies should be listed (on the local bourse to make the market more vibrant)," he told SunBiz in an interview on Friday.

Ruben said the Gnanalingam family, led by his father and Westports founder and executive chairman Tan Sri G. Gnanalingam, who holds 60% (pre-listing) of the port operator through Pembinaan Redzai Sdn Bhd, Dinamik Imbangan Sdn Bhd and Semakin Ajaib Sdn Bhd, initially said no, but softened to the idea early last year.

"After that, we had to convince our partner Hutchinson (Port Holdings Ltd which owns a 32.48% stake in Westports via South Port Investment Holdings Ltd) to list the group, which took a while. That's because we are one of the few ports in the world where Hutchinson owns less than half of the company. In other locations they have a majority stake.

"So, we only decided to go ahead (with the IPO) this time last year," he added.

Ruben said Gnanalingam's softening stance on the IPO was that his son will be taking up the responsibility.

"I don't think he ever wanted to do the roadshow for Westports' IPO, for example. I was the one who said, 'I will do the roadshow, talk to investors, etc'. I will be conducting roadshows in Hong Kong, Singapore and London next week.

"Also, we have always run the company with high (standards of corporate) governance/transparency. That wasn't really a concern," said Ruben.

"Another reason why my father went ahead (with the IPO) was the employees. The culture of the company is that everybody is part of the family and thus, we want them (employees) to be part of our shareholders as well as be part of the company's growth plan," he added.

Ruben also saw the timing for an IPO as right, "now that the company's business is a bit more stable".

"We want to make sure that there will be a steady stream of dividends going forward."

Ruben said the company did not find it necessary to issue new shares in its IPO as it is able to raise the money to fund future plans through Islamic bonds (sukuk) or bank borrowings.

"The company can pay out 75% of its earnings as dividend and fund capital expenditure plans going forward without issuing new shares, provided the economy stays as it is.

"Westports' debt-to-equity ratio currently stands at 0.3 times. As such, we have the ability to raise more debt. Even then, we are targeting that the debt-to-equity ratio will not exceed 1 time," said Ruben.

Post-IPO, the Gnanalingam family will remain the largest shareholder in Westports, owning 46.8%, while Khazanah via Lankayan Ventures Sdn Bhd will hold a 4.99% stake from 7.52% currently and Hutchinson 24.36%.

Westports, slated to be listed on Oct 18, 2013, is selling up to 813.19 million existing shares, or a 23.84% stake, in the company. This comprises an institutional offering of up to 710.89 million shares and 102.3 million to the Malaysian public, eligible employees and directors of Westports and persons who have contributed to the success of the company. Westports will not receive any proceeds from the sale.

The offer price for retail investors is tentatively fixed at RM2.50 per share, which will subsequently be pegged to the institutional issue price to be determined by way of bookbuilding.

Ruben also said Westports does not have any plans to acquire or invest in any other ports for now.

"We don't have a team or resources to look into port acquisitions now. Our main focus will be on Westports to enhance our capacity, turnaround and competitiveness to serve shipping lines calling at the port," he added.

Today, most of the world's shipping lines call at Port Klang, with 35 main shipping lines calling at Westports.