Reflections on Volume

Big volume without further upside equals distribution
Big volume without further downside equals accumulation

Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study

Wednesday, October 27, 2010

Petronas Chem IPO to raise up to $4.2 bln

Written by Reuters Tuesday, 26 October 2010 12:16

KUALA LUMPUR: Malaysia's Petronas Chemicals could raise as much as $4.2 billion in its IPO, the largest ever in Southeast Asia, with the unit of state oil giant Petronas setting a price range for the share issue, according to Reuters on Tuesday, Oct 26.

A term sheet obtained by Reuters showed the initial public offering will offer a maximum of 2.5 billion shares at a price range of 4.50-5.20 ringgit per share. At the high end of 5.20 ringgit ($1.68), the IPO will raise $4.2 billion.

Petronas Chemicals' IPO comes as strong liquidity, low interest rates and comparatively more attractive returns are driving a wave of multi-billion offerings in Asia.

AIA, the Asian life insurance arm of AIG, last week sold $17.9 billion in its Hong Kong float, becoming the world's third largest IPO.

And Singapore wealth fund GIC's logistics unit Global Logistic PROPERTIES [] last week listed after a $3 billion IPO.

The term sheet breaks the IPO down as follows: up to 2.2 billion shares for institutional investors and 293 million retail shares. An over-allotment option, or greenshoe, of 372 million shares has also been made available.

The Employees Provident Fund (EPF) and Kumpulan Wang Persaraan, which are both pension funds, will be cornerstone investors and have undertaken to take up 445 million shares at the final IPO price.

There is a six-month lock-up period for Petronas, the selling shareholder, and the cornerstone investors.

At 5.20 ringgit per share, Petronas Chemicals' price-to-earnings comes in at 15.5 times 2011 earnings and 12.9 times 2012 earnings. The closest peer, Thailand's PTT Chemicals, trades at 20 times forward PE, according to Thomson One data.

The market was divided about the attractiveness of the company's valuations, citing the inherent volatility of the petrochemicals business.

However, some analysts said that the "Petronas premium" -- the added value of having state oil firm Petronas as a parent company -- justified the premium.

Petronas Chemicals' IPO will exceed that of Maxis' last year, which raised $3.3 billion. It will also be bigger than the $647 million being raised by Malaysia Marine and Heavy Engineering, another Petronas-linked vehicle. - Reuters

Taken from here...

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