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Stocks

Malaysia's Eco World plans to raise $500 million from IPO

KUALA LUMPUR (NewsRise) -- Property developer Eco World International has secured approval from the Securities Commission to raise $500 million from what would be Malaysia's largest initial public offering in more than a year.

     The IPO, if successful, comes at a time when stocks in the Southeast Asian nation are stabilizing after a punishing 2015, as foreign investors return to the market on the back of receding political concerns and a rally in the Malaysian ringgit.

     Eco World International plans to use proceeds from the IPO to fund projects in the U.K. and Australia as well as to repay borrowings taken to part-finance acquisition of land, development expenditure and other costs, Eco World said in a statement.

     "We look forward to completing the whole exercise by mid-2016," said Eco World vice chairman Liew Kee Sin. "Once we are listed we will be placed on a much stronger footing to grow our business internationally and take advantage of attractive new development opportunities."

     Eco World's proposed IPO will be the country's largest since power producer Malakoff Corp raised $792 million in April last year. IPOs of four companies raised $173 million year-to-date, compared to just one share sale which raised $5 million over the same period in 2015, according to data from Dealogic.

     Eco World plans to sell up to 2.15 billion new shares, or 89.7% of the company, and issue up to 960.0 million free warrants on the basis of two warrants for every five shares held after the IPO.

     The company didn't disclose potential proceeds in the Thursday statement, although Eco World executives have previously said its planned IPO could raise over 2.00 billion ringgit ($500 million). Eco World's listed parent, Eco World Development Group, plans to hold up to 30% in the company after the listing.

   Eco World currently has three projects in London that fetched the company 581.1 million pound sterling in sales while one project in Sydney achieved 265.6 million Australian dollars in sales.

     "The IPO will enable institutional and retail investors to invest directly in an international property developer that offers an attractive portfolio of existing development projects in the U.K. and Australia," Eco World added.

     Malaysia's benchmark FTSE Bursa Malaysia KLCI has climbed 1.5% so far this year while the ringgit has gained nearly 10% since January aided in-part by a rebound in crude oil prices.

     IPOs of 10 companies raised about $1.02 billion in Malaysia for the entire 2015, a year marked by sharp decline in the country's oil-linked currency and controversy surrounding a state-owned investment fund that dragged down stocks and other assets.

     That prompted corporates to delay or shelve fund raising activities last year as the benchmark KLCI lost 3.9% through 2015. Foreign investors meanwhile dumped emerging market assets ahead of a rise in U.S. interest rates, pushing the ringgit down by more than 20% against the U.S. dollar last year.

     Eco World Development Group rose 1.4% at 1.44 ringgit on Friday while the KLCI was down 0.3%.

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