Ranhill launches RM753 million IPO

KUALA LUMPUR (July 5, 2013): Ranhill Energy and Resources Bhd has started the bookbuilding exercise of its initial public offer (IPO) of RM753 million, as the utilities and oil and gas company seek to raise funds to pare down debts and expand its wastewater treatment business in China.

The price range for the IPO was set at between RM1.70 and 1.85 each. The joint global coordinators, bookrunners and underwriters of the exercise Maybank Investment Bank Bhd and CIMB Investment Bank Bhd said yesterday that the IPO shares reserved for institutional investors had been "oversubscribed.''

The bookbuilding exercise will close on July 15. Retail investors will pay RM1.85 a share for the IPO stocks, but the final retail price will be determined after the bookbuilding exercise in over.

Ranhill is offering up to 407 million shares worth as much as RM753 million for its IPO. The company has set aside 328.7 million shares for institutional investors and 78.28 million shares for retail investors.

The group, which has power generation assets, water distribution and treatment contracts, as well as a growing oil and gas division- is targeting to raise as much as RM610 million from the IPO by issuing 330 million new shares. Its existing shareholders, including president and chief executive Tan Sri Hamdan Mohamad, are offering 77 million shares to the public.

The IPO deal comes with a "greenshoe" option, or shares that are issued post listing if the stock falls below its IPO price.

These additional shares are used to support the stock.

Ranhill will use the bulk of the proceeds from the IPO to pare down existing debts, including redemption of outstanding bonds for a power plant in Sabah and partial redemption of Sukuk for the Senai Desaru highway project in Johor.

"The IPO exercise will revitalize our capital structure, de-gear the company and fund our expansion plans in China,'' Hamdan told reporters at the launch of the group's prospectus yesterday.

Information from the prospectus showed that Ranhill has allocated RM61 million for the expansion of its waste water treatment business in China.

Hamdan said the group's business in China generated revenue of RM150 million in 2012, and the expansion will boost its potential contribution to RM500 million over the next few years.

Ranhill's environment division includes a water supply concession in Johor, as well as waste water treatment in China and Thailand. The division generated RM866.8 million, or 45% of revenue in the year ended Dec 31, 2012 (FY12).

Meanwhile, the oil and gas business makes up RM758 million, or 37% of revenue in FY12. The power generation unit saw sales of RM355.7 million in FY12.