MARKET volatility has forced oil and gas company Samudra Energy to postpone its planned initial public offering (IPO) here.
The firm, which counts Asian magnates such as Mr Li Ka-shing and Mr Robert Kuok among its shareholders and cornerstone investors, had planned to reveal details about its listing at a briefing yesterday but called it off.
It lodged its prospectus with the Monetary Authority of Singapore on July 24 and is reportedly seeking to raise between $248 million and $276.3 million.
Samudra chief executive officer Ridwan Rusli said: "Given the current market volatility, we think that now is not the optimal time for Samudra Energy to move forward with an IPO."
He added that it was a collective decision made by the firm and its sponsors, with a view towards ensuring the most successful IPO possible for all stakeholders and investors.
"We remain focused on our business and will update investors, where appropriate, in due course," he said.
Samudra, which undertakes oil and gas exploration and production in Indonesia, has reason to feel skittish given that local punters have not been kind to the two most recent debuts here: Accordia Golf Trust and Terratech.
Accordia, a business trust that began trading last Friday, fell 12 per cent below its IPO price on its first trading day and is now 13 per cent underwater.
Marble manufacturer Terratech, which debuted last Wednesday, closed 1.5 cents lower at 17.8 cents yesterday - 22.6 per cent below its IPO price.
The broader Singapore market has largely been taking its cues from Wall Street, which has been rocked in recent weeks by economic and geopolitical troubles around the world, including Argentina's debt default, a bank bailout in Portugal and ongoing clashes in Ukraine.
NRA Capital executive chairman Kevin Scully said it will be especially hard for IPO hopefuls in Asia to feel confident until regional markets find favour again.
"Everyone has been saying that the rally in capital markets has been over-extended and people are expecting a correction but this hasn't happened. Furthermore, the rally has been accompanied by low trading volumes," he said Market observers also expect the United States Federal Reserve to start hiking interest rates next year, he added.
This will likely lead to an appreciation of the US dollar and continued fund flows out of emerging markets and Asia, as assets priced in other currencies will lose their value when converted to a stronger greenback.
"I think next year, the US and European markets will do better, while Asia will underperform," said Mr Scully.
Although Samudra is the first company in recent weeks to hold off on its listing because of market conditions, it is not uncommon for companies to do so.
In May, when regional stocks were being sold off amid concerns about slowing economic growth in China and other emerging markets, South Korea's Lotte Shopping postponed an up to US$1 billion (S$1.25 billion) real estate investment trust listing in Singapore.
yasminey@sph.com.sg RECENT DEBUTS HIT BY VOLATILITY Accordia Golf Trust The business trust began trading last Friday. It fell 12 per cent below its IPO price on its first trading day and is now 13 per cent underwater. Terratech The marble manufacturer debuted last Wednesday. It closed 1.5 cents lower at 17.8 cents yesterday - 22.6 per cent below its IPO price.
This article was first published on August 7, 2014.
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