Tuesday 20 December 2016

Millions and Billions

Two interesting articles in The Edge.

Shell Malaysia gets MTO at RM1.92 per share

The offer was triggered after MHIL's conditional sale and purchase agreement for 51% of Shell Refining, signed in February 2016 with Shell Overseas Holdings Ltd, turned unconditional today, Shell Refining said in a filing on Bursa Malaysia today.

I wrote before about this matter. The acquirer wants to retain the listing status, which means this is a "friendly" offer, minority shareholders can simply accept or reject the offer, there is no pressure.

The second article:

Konsortium PetroHub to raise US$180 bil over next 5 yrs for refineries in Kedah

Konsortium Asia PetroHub (KPHUB) expects to raise US$180 billion in funds over the next five years for its oil refinery facility construction project in Kedah known as Sultan Abdul Halim Refinery Complex.

The consortium was formed by a group of companies, namely IMC London, a group of bankers and funders based in Britain who have a 50% share, as well as VR4U Technologies Sdn Bhd with a 30% share and another local based company with a 20% share.

The amount raised will be used to fund four additional refineries over the next five years. There are six refineries to be developed in total and the first two will be developed starting January 2017.

Both articles about refineries, but there is something rather "strange" going on if we compare the two articles:

  • Regarding Shell, at the current share price the whole company is valued around USD 150 Million (that starts with the letter "M")
  • Regarding KPHUB, it expects to raise USD 180 Billion (that starts with the letter "B")

The refinery of Shell will be quite old, and probably smaller in size, but does this explain a thousand fold valuation difference? It seems rather puzzling to me.

The article continues: "The second agreement was with QMIS World Trade International, which has close collaborations with various Chinese conglomerates and will act as a listing agent in Nasdaq US and Hong Kong Stock Exchange to raise funds for the project."

I tried to Google on "QMIS World Trade International", expected to find a company with lots of experience in this matter, having done dozens of multibillion dollar deals on many international exchanges. But I could not find anything relevant, it even looks like they have no website, a fate they seem to share with VR4U Technologies Sdn Bhd .

Lots of questions remain .......

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