PETALING JAYA: High-profile Indonesian oil and gas explorer Samudra Energy Ltd has postponed its flotation on the Singapore market, citing weak market conditions.
At the same time, media baron Rupert Murdoch’s Twenty-First Century Fox has called off a takeover of Time Warner.
These events have led some analysts to raise questions as to whether this was the beginning of a slowdown in corporate activity.
Markets worldwide have also been performing badly since the recent twin developments in Argentina and Portugal.
Argentina defaulted on its sovereign bonds last week, and early this week, Portugal’s central bank took control of Banco Espirito Santo SA, once the country’s largest lender, in a 4.9 billion euro (RM21.14bil) bailout. Yesterday, Italy also slipped into recession.
Samudra Energy, which had already secured some prominent Malaysian tycoons as pre-initial public offering (IPO) and cornerstone investors, told Reuters that the company decided not to proceed with the IPO due to volatile market conditions.
Insiders told StarBiz that while the book building for the IPO was going well for most of July, it suddenly tapered off in the middle of last week.
In addition, the poor performance of Accordia Golf Trust, which listed on the Singapore Exchange (SGX) last Friday, was another reason that could have possibly contributed to the decision to postpone the Samudra Energy listing, insiders said.
Accordia, which is a business trust consisting of golf courses in Japan, fell by as much as 17% on its first day of trading on Aug 1. The stock closed yesterday at 84.5 Singapore cents (RM2.17), down 13% from its IPO price of 97 Singapore cents.
Another poor performer in Singapore is PACC Offshore Services Holdings Ltd (Posh), which is the city-state’s largest IPO this year.
The Robert Kuok-owned Posh, an offshore marine services provider, is down 12% since its flotation on the SGX on April 25.
Kuok, along with fellow Malaysian tycoon Tan Sri Quek Leng Chan, are investors in Samudra Energy. Its all-star list of shareholders also includes Hong Kong billionaire Li Ka-shing. Li, Quek and Caprice Capital, which belongs to savvy investor Paul Poh, are cornerstone investors of Samudra Energy, while Kuok’s Kerry Group is an early investor in the company, holding 21.9%. Samudra Energy has three oil-producing assets in south Sumatra and is seeking to raise between S$248mil (RM635mil) and S$276.3mil (RM706mil), largely to retire debts, a move which would nudge the company towards profitability.
Samudra Energy, which began taking orders from institutional investors in July, was looking to sell about 131 million shares at an indicative price range of S$1.89 to S$2.11 a share.
The company was due to set the price of the offering on Tuesday, but decided to defer the offering, Reuters reported.
Samudra Energy is part of private-equity firm Northstar Group, which focuses on Indonesia and South-East Asia.
Sources close to the company told StarBiz that its owners were still set on listing the company on the SGX, but would wait for market conditions to improve. “The listing could take place as early as next month, if markets stabilise,” said one source.
It is understood that the promoters of the company were concerned that external factors would drag down the price post-listing.
“They have high-profile investors that they don’t want to disappoint,” he said.
The promoters were confident they were pricing the issuance at an attractive “dollar per barrel” price, but didn’t want their investors to see the value of their investments deteriorate soon after the listing, he added.
Notably, the giant Chinese pork supplier WH Group Ltd also suffered a similar fate when it called off its listing in April, citing “deteriorating” market conditions. But on its debut on the Hong Kong market this week, WH Group’s stock rose by around 10% of its first day of trading.