Bursa Malaysia’s IPO debut

Bursa Malaysia Bhd (Bursa Malaysia) made a strong debut on the Main Board on 18 March 2005, becoming the seventh exchange operator in Asia Pacific to transform into a public-listed entity.

Prior to its listing, Bursa Malaysia, which operates the country’s stock and derivatives exchanges, launched its initial public offer (IPO) of 166 million new ordinary shares on 23 February 2005, following a two-week roadshow covering Europe and Asia.

The March 4th offering raised RM521 million, with the institutional portion of 116.90 million shares at RM3.20 (US$0.84) apiece oversubscribed by 38 times. The retail portion of 20 million shares was oversubscribed by 11.74 times.

Bursa Malaysia’s share price opened at RM3.50 (US$0.92) on strong volume of 8.5 million shares and rose as high as RM3.82 (US$1.01) before ending the day at RM3.70 (US$0.97). This translated into a 23% premium for individual investors who were offered the shares at RM3 (US$0.79) each and a 16% premium to fund managers who bought them at RM3.20 each.

It topped the day’s most active list with 101 million shares traded – 288% higher than the next most traded issue. It was the day’s ninth highest gainer by percentage.

Bursa Malaysia Chief Executive Officer Yusli Mohamed Yusoff said, “Through our listing, we hope to heighten the profile of not just the exchange, but also its market participants and Malaysia as an investment destination”.

“It also signals the coming of age of the bourse itself as an exchange that is confident enough to open itself up to the market and attract investors and market players the world over,” he added.

Bursa Malaysia’s growth strategy

Bursa Malaysia will focus on three key areas in growing the business of the exchange. The first focus is to increase turnover velocity by encouraging greater participation from existing market participants, mainly listed companies and companies seeking listing, intermediaries, as well as institutional and retail investors.

One of the initiatives is greater research coverage on Malaysian stocks through the CMDF-Bursa Research scheme launched in January 2005.

Bursa Malaysia is also looking to re-establish a trading link with the Singapore Exchange to help boost liquidity of both exchanges. The link, expected to be launched in 2006, will facilitate the trading of securities listed on the Singapore Exchange by investors in Malaysia and similarly for securities listed on Bursa Malaysia by investors in Singapore. It will also provide brokers access to market and trading information, and allow them to transmit orders through their local trading terminals directly into the electronic trading systems of the other exchange.

The second area of focus for Bursa Malaysia is to enhance revenue growth through new products and services. This includes introducing new products and services for both derivatives and equities market, and strengthening its information business.

Bursa Malaysia is also in the midst of implementing a common trading platform (CTP) to promote the local securities market abroad. The derivatives platform is expected to go live in the second quarter and the equities component is expected to kick off in the last quarter of the year.

The CTP will facilitate the trading of all products of the exchange to one integrated platform to enhance the turnaround time for the introduction of new products.

Bursa Malaysia hopes that improved access, improved trading algorithms and new businesses will translate into higher trading volumes and enhance trading of multiple instruments. The enhanced range of products and service offerings facilitated by the CTP will encourage participation of intermediaries and investors on the exchange, thus improving liquidity.

The third area of focus is to enhance operational scale and efficiency. Through business process re-engineering, Bursa Malaysia aims to improve turnaround time of operational and regulatory functions, improve business efficiency and enhance customer satisfaction. It also seeks to focus on proactive capital management, seeking ways to optimise its capital structure and maximising returns to shareholders. Yusli also said that Bursa Malaysia would concentrate on ways to improve the quality of the 1,000-odd companies listed on the exchange.

While focusing on enhancing commercial value, Bursa Malaysia will continue to discharge its duties as a regulator in maintaining a fair and orderly market with its intention to set corporate governance and disclosure standards for the industry.

“Listing the exchange will enhance the profile of not just Bursa as a competitive global exchange, but it will also profile the competitiveness of the Malaysian capital market. The listing is also geared towards instilling greater discipline in enhancing transparency and efficiency at the exchange.”

Yusli Mohamed Yusoff,
CEO, Bursa Malaysia at its IPO launch,
February 2005