Malaysia’s Ekovest Plans $500 Million IPO for Infrastructure Assets

Ekovest lim keng cheng.jpg

The Malaysian construction and property company Ekovest Bhd. is planning to list its infrastructure assets in a public offering that will raise at least $500 million in proceeds, according to people familiar with the matter, including its managing director. (The Wall Street Journal

Ekovest, co-founded and controlled by Malaysian tycoon Lim Kang Hoo, is considering an IPO of its highway-concession business as early as 2018, according to two people with knowledge of with plan. It would list on the local stock exchange, known as Bursa Malaysia.

Ekovest’s managing director Lim Keng Cheng confirmed that the company was considering taking its highway-concession business public as part of its effort to realize the value of its assets. Mr. Lim said in an interview that he wouldn’t provide targets for the time frame or size of the IPO. But then he said it would be worth $500 million “or more, depending on the cash flows and also timing to market.” If the listing happens, Ekovest would use the proceeds to reward its existing shareholders and expand the company, he added.

Kuala Lumpur-based Ekovest officially announced Tuesday that it sold a 40% stake in its highway-operating unit to state pension fund Employees Provident Fund for 1.13 billion ringgit ($270.6 million) cash. Ekovest first announced the fund’s interest in buying the stake in an August filing to Bursa Malaysia. That deal implicitly values the urban expressways held under the unit at 2.82 billion ringgit, according to research firm UOB Kay Hian.

The highway-operating unit, called Konsortium Lebuhraya Utara-Timur (KL), or Kesturi in short, holds the concession to maintain the 18-kilometer Duta-Ulu Kelang Expressway (Duke) and its coming 16-kilometer extension. Both expressways provide access to major areas of the country’s urban Klang Valley, where the capital Kuala Lumpur and its suburbs lie. 

A listing of Ekovest’s highway-concession business could provide a lift to the Malaysian equity market. Slumping prices of oil and gas have held down investor appetite for larger new share offerings in recent years there. First-half IPO volume in Malaysia was just $210 million, compared with $853 million a year earlier, according to Dealogic data. Malaysia’s economy expanded at the slowest pace in almost seven years in the second quarter ending in June, as net exports declined. The country is due to release its third-quarter ended gross domestic product data on Friday.