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PETALING JAYA: Malakoff Corp Bhd’s initial public offering (IPO), very likely the largest in Malaysia this year, will hit the market in May, with an indicative price of RM1.80 per share, valuing itself at RM9bil.This was revealed in a circular to shareholders by MMC Corp, the 51% parent of Malakoff, which will hold an EGM on March 30 to vote on the proposed listing.One analyst said that the RM1.80 indicative IPO price was “good for MMC” considering that it would value Malakoff at a price earnings (PE) multiple of 18 times its financial year 2015 earnings, which the analyst pegged at around RM500mil.“The exercise would enable MMC to unlock its value in Malakoff,” said one analyst, who has turned more bullish on the prospects of MMC after hearing about the RM1.80 price tag for Malakoff’s IPO.However, one fund manager said he had ascribed a value of RM10bil to Malakoff, after taking into account the earnings from the soon-to-be commissioned Tanjung Bin 4 power plant in Johor, which would be Malakoff’s seventh power plant in Malaysia.He said the indicative IPO price, while decent and provided upside for investors, only valued Malakoff at a forward PE of 12 to 13 times earnings.Malakoff, which was privatised in 2006, is the country’s largest independent power producer (IPP). It will be issuing 1.52 billion shares or 30.4% of the enlarged paid-up capital of the company. Of the 1.52 billion shares, one billion shares will be new shares while the balance 520,000 shares are existing shares being offered for sale.MMC’s stake in Malakoff will be reduced to 37.8% after the latter’s listing.The bulk of the money to be raised from Malakoff’s listing exercise will go to its parent company. MMC will use the proceeds to repay its current borrowings while the rest as expenses for the proposed offer shares.MMC believed that Malakoff’s listing was an “opportune time to introduce Malakoff to the Malaysian equity market” via the proposed IPO.It added that the proposed listing was in line with MMC’s long-term objective to position the Malakoff group as a leading Malaysian multinational water and power company, given Malakoff’s wider geographical footprint and portfolio of assets and its long-term off-take agreements with creditworthy counterparts.“Through the proposed offer of shares, we will also be able to increase our shareholders’ funds and repay part of our borrowings, thereby reducing our gearing and further improving our capital structure.“We also expect this to provide us with greater financial flexibility to fund our future expansion, if any,” MMC said in the circular.Analysts said the listing of Malakoff would create a lighter MMC, enabling the conglomerate to increase its dividends to attract investor interest.“MMC’s balance sheet will improve following the decognition of borrowings in Malakoff. Its (MMC) debt burden will be lightened and its balance sheet will improve tremendously, reducing its debt-to-equity ratio, giving room for it to raise fresh capital,” an analyst said.The analyst added that MMC could remove some RM16bil of Malakoff’s debt from its balance sheet post-listing when MMC pared down its stake in Malakoff.Analysts added that Malakoff presented a good opportunity for investors looking to invest in an IPP.They said the uncertainty of 1Malaysia Development Bhd’s (1MDB) listing of its energy unit, Edra Global Energy Bhd, which has been postponed several times, also made Malakoff a stronger listing candidate among the two IPPs.For the financial year ended Dec 31, 2014, Malakoff posted a net profit of RM412.8mil on revenue of RM5.59bil.About 96.6% of Malakoff’s revenue was derived from customers located in Malaysia while the remaining 3.4% from foreign customers.Malakoff has an effective capacity of 5,346MW comprising six power plants that run on coal, oil and gas. Its 1,000MW coal-fired Tanjung Bin 4, which is scheduled to be completed next year, is six months to a year behind schedule.On the international front, Malakoff owns a net capacity of about 690MW of power production and 358,850 cu m per day of water desalination facility.The institutional offering for the IPO would involve up to 1.279 billion shares.Maybank Investment Bank Bhd is the principal adviser for this listing.