By P.R. VENKAT (The Wall Street Journal)
Westports Holdings Bhd., a Malaysian port operator partly owned by Hong Kong billionaire Li Ka-shing, started taking orders from institutional and retail investors for its nearly $700 million initial public offering, the biggest such share sale in Malaysia this year.
The port operator, which manages one of Asia's busiest shipping terminals at Port Klang on the west coast of peninsular Malaysia, timed its IPO for subscriptions on a day when markets across Asia are rallying after the U.S. Federal Reserve's surprise move to leave its stimulus measures intact.
Asian markets have been volatile since late May on expectations that the Fed could start tapering off its $85 billion bond-buying program as U.S. data showed the economy was recovering. But, with the Fed's statement late Wednesday that it will continue with its low interest-rate policy, investors are likely to put money back in the Asian markets that offer a higher return compared with the U.S., which is expected to keep its rates low.
Westports is seeking to sell a total of 813.2 million shares at an indicative price range of 2.30 ringgit to 2.50 ringgit ($0.72 to $0.79) a piece, a term sheet seen by The Wall Street Journal showed.
Hutchison Port Holdings—the Singapore-listed port operator owned by Mr. Li—has a 31.5% stake in Westports. Westports was founded by G. Gnanalingam, whose son Ruben is now chief executive. Both Mr. Li's company and Mr. Gnanalingam are selling a portion of their stakes in this offering.
The offering could help rekindle Malaysia's deals market, which was home to some of the world's largest IPOs last year, including state-run palm oil planter Felda Global Ventures Holdings Bhd.'s $3.2 billion offering. But this year companies held back on IPO plans ahead of elections in May, and since then deals have been few, partly due to market conditions. A successful offering by Westports that is looking to list on Bursa Malaysia on Oct. 18, will give other companies in the IPO pipeline the confidence to proceed. They include state-backed conglomerate UMW Holdings Bhd's oil and gas unit and property firm real Iskandar Waterfront Holdings Sdn. Combined, those two could raise more than $2 billion before the end of the year, according to people familiar with their plans.
More than half of the IPO has already been taken by nine cornerstone investors, including life insurer AIA Group, Bermuda-based Utilico Investments Ltd. and Malaysia's state-run Employees' Provident Fund, the term sheet showed.
Cornerstone investors commit to buying shares in an IPO before it has been formally launched and to holding them for a fixed time period, making the IPO more attractive to other potential investors. The cornerstone investors in the Westports IPO have a three-month lock up period.
This year, Malaysia has seen a handful of IPOs since the May election, but none larger than $500 million. The last big IPO in Malaysia was nearly a year ago, when pay-TV operator Astro Malaysia Holdings Bhd. made its $1.5 billion debut in October.
Separately, people with knowledge of UMW's Oil & Gas Corp. Bhd.'s up to $850 million IPO said last week that the deal has been mostly covered with as many as eight cornerstone investors agreeing to take up shares. UMW is also likely to start taking orders from institutional and retail investors next month and could see heavy demand on the success of Westports IPO, these people said.
Bank of America Merrill Lynch, Credit Suisse Group AG, Goldman Sachs and Maybank Investment Bank Bhd. are among the banks advising Westports on the IPO.
