Wednesday, 25 September 2013

Vincent Tan playing the listing-delisting-relisting game?

Seven Convenience (part of Berjaya Retail) is going for IPO. Berjaya Retail was listed but delisted again only nine months later!

The listing-delisting-relisting game is getting more and more popular in Malaysia, and it is not hard to see why. List your company at a lofty valuation, delist it when the price is depressed, and relist is some time later again, again at a lofty valuation. Rinse and repeat if needed or possible.

But where does this leave the long term value investors?

And again, as usual lately, an extremely small allocation for the retail investors, 3.2%, although somewhat higher than in the case of Westport, where only a pathetic 2% is allocated. What is the rationale of "going public", if the company does not want to give the public the opportunity to be part of the IPO?

With all the financial engineering going on, Bursa Malaysia might point out at the big numbers of IPO's, increase in market cap etc. But it might lose sight of the small men in the street, who simply might lose their interest.

Bursa should not complain if retail interest is waning, they only have themselves to blame.

(Reuters) - Seven Convenience Bhd, a 7-Eleven convenience store chain operator in Malaysia, is offering up to 530.33 million shares in an initial pubic offering (IPO) that could be worth about 700 million ringgit ($218.82 million), a draft prospectus showed on Tuesday.

The IPO is expected before the end of the year and will be used to fund the company's expansion and refurbishment of its stores, information technology systems and for working capital, the prospectus showed.

Controlled by Malaysian billionaire Vincent Tan, the company's offer represents up to 43 percent of its enlarged paid-up capital, of which 490.78 million shares or 39.8 percent will be offered to institutional investors.

The balance of 39.55 million shares or 3.2 percent will be allocated to retail investors. There is an over-allotment option of up to 74.03 million shares or 14 percent of the IPO shares offered, the prospectus showed.

Seven Convenience, part of Berjaya Retail Bhd, is Malaysia's largest convenience store chain with close to 1,500 outlets, according to its prospectus.

The company recorded revenue of 1.58 billion ringgit and profit after tax of 40.5 million ringgit in 2012, representing a compound annual growth rate of 9.7 percent in revenue and 22.4 percent in profit from 2010 before its parent company Berjaya Retail was delisted.

Seven Convenience attributed the growth in revenue to the increase in the number of stores and same-store sales. It said profit grew from an increase in commissions on its in-store services.

Tan, Malaysia's tenth richest person according to Forbes, took Berjaya Retail private in 2011, nine months after the company was first listed on Aug. 16, 2010, due to the dismal performance of the shares.

The company has given no information on pricing of the shares and did not provide any details on the size of the listing or a time frame for the IPO process.

Seven Convenience hired Maybank Investment Bank as the principal adviser, joint global coordinator, joint bookrunner, joint managing underwriter and joint underwriter for the listing. Joint global coordinator and joint bookrunner is UBS. CIMB Investment Bank is the joint bookrunner and joint underwriter.

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