Bursa Malaysia, which groups the country's financial, commodity and derivative exchanges, today launched an initial public offering (IPO) to raise up to RM500 million and lift its international profile.

Bursa targets a flotation on March 18, which will boost its competitiveness as it joins the ranks of other listed stock exchanges in Asia including those in Singapore, Hong Kong and Australia.

The listing, which is controlled by the Ministry of Finance Inc., is seen as part of Malaysia's long-term plan to liberalise its financial markets and woo foreign investors.

The exchange is offering 166 million new shares, of which 70 percent or 116.9 million shares are allocated to international and Malaysian institutional investors at a price range of between RM2.50 and RM3.20 a share, officials said.

The retail tranche of 49.1 million shares would be offered to the public, directors and employees at RM3.00 each.

In its prospectus, Bursa projected net profit to nearly double to RM60.3 million in 2005, up from RM33.08 million in 2004.

It expects to pay dividends of not less than 75 percent of its 2005 net profit, which translates to a gross dividend of RM0.12 a share.

Based on its retail price and net earnings per share of RM0.121, the company would be entering the market on a prospective net price-earnings multiple of 24.9 times.

Enhancing competitiveness

Bursa's chief executive Yusli Mohamed Yusoff told reporters that the IPO would not only lift Bursa's international profile but would also enhance the competitiveness of Malaysia's capital markets.

Asked about reports that Bursa had received orders for about six times the number of shares on offer to fund managers, he said response to roadshows that kicked off last week in Singapore, Hong Kong and Europe had been "very good."

Yusli said Bursa's 2005 earnings forecast was "conservative" and based on a 10 percent rise in trading volume.

Earnings last year were dragged down by a "one-off exceptional item" due to its voluntary retrenchment scheme, he said.

Upon completion of the IPO exercise, he said the exchange would have a net cash balance of about RM850 million.

The company said the IPO proceeds would be used, in part, to restore its balance sheet following a capital reduction before the listing and for working capital.

Bursa said it aimed to grow its business by entering into new alliances with strategic partners to boost turnover velocity, introduce new equities and derivatives products and services, and improve efficiency and capital management.