Bumi Armada Said to Raise $888 Million in Kuala Lumpur IPO

Malaysian Billionaire T. Ananda Krishnan
Malaysian billionaire T. Ananda Krishnan. Photographer: Matthew Staver/Bloomberg

Bumi Armada Bhd., a company controlled by Malaysian billionaire T. Ananda Krishnan, raised 2.66 billion ringgit ($888 million) after pricing shares at the upper half of its indicative range in the country’s biggest initial public offering this year, two people familiar with the matter said.

The Kuala Lumpur-based oil and gas services company sold shares at 3.03 ringgit each, said the people, who asked not to be named as the information is still private. Demand exceeded supply by 40 times, said a third person with immediate knowledge of the sale, declining to be named for confidentiality reasons.

The offering comes as Sun Art Retail Group Ltd., China’s top hypermarket operator, bucked a recent slump in demand for new equity in Hong Kong to raise $1.1 billion after selling shares at the top end of a range. At least seven IPOs have been canceled or postponed in Hong Kong this year, and several large issuers including Samsonite International SA have had to accept prices below the maximum they sought.

“At 3.03 ringgit, Bumi Armada is leaving quite a lot on the table, probably to attract long-term investors given the current lukewarm response to recent IPOs such as Samsonite,” said Bharat Joshi, who helps to manage about $5 billion at Aberdeen Asset Management in Kuala Lumpur. Aberdeen didn’t subscribe to Bumi Armada IPO shares.

Sugar Refiner

Bumi Armada’s shares were priced at 19 times 2010 earnings, according to data compiled by Bloomberg. Oil and gas equipment and service providers from emerging Asia-Pacific nations trade at about 27 times the last twelve month’s earnings, Bloomberg data show.

Great Eastern Life Assurance (Malaysia) Bhd. and Prudential Fund Management Bhd. are among so-called cornerstone investors who will buy a combined 10.2 percent of the shares, Bumi Armada said on June 30.

The company declined to comment in an e-mailed reply today. The IPO is Malaysia’s largest since Petronas Chemicals Group Bhd. raised a record 12.8 billion ringgit in November.

Eleven of the 18 companies debuting in Malaysia this year have advanced from their offer price, data compiled by Bloomberg show. MSM Malaysia Holdings Bhd., which bought billionaire Robert Kuok’s sugar refining business two years ago, also sold shares at the top of its range in June.

History of Relisting

Krishnan, Malaysia’s second-richest person after Robert Kuok, has a history of delisting and relisting companies. He privatized cell-phone carrier Maxis Communications Bhd. 2007 and took it public again as Maxis Bhd. in 2009 without its international operations.

He has since delisted pay-TV broadcaster Astro All Asia Networks Plc, satellite operator Measat Global Bhd., and power and gaming group Tanjong Plc.

Bumi Armada’s profit in 2010 rose 26 percent from a year earlier to 350.8 million ringgit, or 16.02 sen a share, according to the company’s draft prospectus. Revenue climbed to 1.24 billion ringgit from 732.1 million ringgit, it said.

CIMB Investment Bank Bhd., Maybank Investment Bank Bhd., RHB Investment Bank Bhd., Credit Suisse Group AG, UBS AG and CLSA arranged Bumi Armada’s IPO.

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