Analysts were puzzled why SP Setia privately placed out shares at a discount even as Malaysia’s biggest property development group’s shares bounced to its highest level in nearly 3 months at RM3.49 on strong fundamental buying interest Wednesday. Last Friday, SP Setia sold new shares representing about 15 percent of its enlarged capital at RM2.94.
SP Setia’s shares rose 23 sen or 7 percent to RM3.49 on the Kuala Lumpur Stock Exchange Wednesday. This added to the market’s 15 sen gain last Friday. The market was closed on Monday and Tuesday due to Chinese New Year holidays.
“The exercise is not beneficial to existing shareholders as they have to give a discount,” an analyst at TA Securities said. “Maybe they hope to attract more GLCs (government-linked corporations) to take up stakes.”
Some analysts said they were puzzled why SP Setia’s main shareholder Permodalan Nasional Berhad (PNB)’s had agreed to the company’s move to place out new shares at near historically low prices.
This move seems to contrast with those early last year, when PNB had moved in aggressively to accumulate SP Setia shares. PNB raised their stake from below 33 percent to over 70 percent of the company over several months after they made an offer to buy shares from the market at RM3.95. SP Setia President and CEO Liew Kee Sin’s stake of 11 percent was also sold down then to about 5 percent.
After PNB swallowed up the group’s shares, SP Setia’s shares subsequently took a beating, ending the year 2012 ranged bound at RM3.10-RM3.20, about 18 per cent lower than at the start of the year. Analysts said that the share fell as it was delisted from the MSCI Malaysia index and foreign holdings of the company were sold off.
PNB’s stake in SP Setia could be diluted to as little as 54 percent, from 71.23 percent before the share placement. SP Setia’s president and CEO Liew’s stake could be as low as 4 percent, compared to 5.29 percent before. Both parties did not participate in the new shares placement.
With funds under management totaling more than RM200 billion (as at September 2012), the PNB Group is Malaysia’s leading investment institution with a diversified portfolio of interests that include unit trusts, property trusts, property management and asset management.
PNB officials declined to offer immediate comment about SP Setia when contacted.
The rise in SP Setia’s share price is not unexpected as most research analysts had called for a “BUY” on SP Setia even before the latest share placement exercise. Most analysts were bullish as SP Setia had a huge land bank and many multi-billion dollar projects on its book.
SP Setia’s spokesperson declined to reveal details of the companies who took up the new SP Setia shares last Friday, which was placed out by Maybank Investment Bank.
In a statement issued last Friday, the company’s president and CEO Liew Kee Sin said that the 320.7 million new shares placement attracted demand from “a good mix of Malaysia, Asian, UK and US funds and was subscribed to by more than 70 local and foreign investors, nearly all of whom are very well known and highly reputable institutional funds.”
Liew said that the RM943 million raised from its accelerated book building exercise would be used for working capital. “This strong vote of confidence from both local & foreign institutional investors provides SP Setia with significant firepower to execute the many projects we have both in Malaysia and overseas,” Liew said.
These include its 40 percent stake in the redevelopment of the Battersea Power Station in London, Qinzhou Industrial Park which it is spearheading in China and its own existing developments in Australia and Singapore. The Battersea project has a Gross Development Value of RM40 billion and is branded as Malaysia’s biggest overseas property development.