This article first appeared in The Edge Malaysia Weekly on March 10, 2025 - March 16, 2025

AFTER failed attempts to monetise its stake in Orkim Sdn Bhd through a mergers and acquisitions exercise, Ekuiti Nasional Bhd (Ekuinas) is said to be exploring an initial public offering (IPO) of the oil and gas (O&G) shipping company.

Sources say Ekuinas is already in talks with several investment bankers on the potential listing of Orkim that could peg it with a valuation as high as RM1 billion. It is understood that CIMB Investment Bank has been tipped to lead the IPO, with involvement by Maybank Investment Bank as well.

“The IPO of Orkim follows several years of negotiations on a direct sale, but the parties were unable to reach an agreement on the valuation,” a source says.

While Ekuinas may be seeking a RM1 billion valuation, say sources, the current O&G environment could pose a challenge to its aspirations. The listing is expected to take place in the fourth quarter of this year.

When contacted, Ekuinas says it has been studying ways to monetise its investment in Orkim, and that an IPO is one of the options.

“As a private-equity firm with a unique mandate to invest and increase bumiputera equity in the Malaysian market, Ekuinas continuously reviews its investments and considers various viable exit strategies,” Ekuinas tells The Edge.

“It is no secret that we have been exploring the best possible exit for Orkim, carefully evaluating the most strategic and value-maximising options. An IPO is among the possibilities under consideration, but we are unable to comment further at this stage.”

Ekuinas bought a 95.5% stake in Orkim in December 2014 for RM346.3 million from Global Maritime Ventures Bhd, a subsidiary of Bank Pembangunan Malaysia Bhd.

A PE fund such as Ekuinas typically has a time frame of four to six years to transform a company, creating value and opportunities in it, before planning a divestment. In the case of Orkim, the investment has been almost 10 years.

Orkim began as a ship broker in 2004 and morphed into a shipowner five years later after taking delivery of its first vessel, according to its website. Its main business is transporting clean petroleum products (CPPs) from refineries to oil storage facilities. It currently has a 40% share of the market.

Last year, The Edge reported that Ekuinas’ sale of its shipping unit Orkim was understood to have come down to a two-horse race between a party led by Sarawak-based Hubline Bhd (KL:HUBLINE) and privately held Powertium Marine Sdn Bhd.

Hubline later confirmed The Edge report that it was in talks with Ekuinas over the potential acquisition of Orkim but noted that the discussions were at a preliminary stage.

Ekuinas’ asking price was said to be roughly RM1.2 billion, which was considered high by many in the industry. Both bidders were understood to have come up with bids in the region of the asking price.

Powertium Marine, meanwhile, was said to have sought funding from DS Asset Management LLC, a Dallas, Texas, fund manager, with which to form a joint venture for the acquisition. Powertium Marine was understood to have brought in CIMB IB to advise and support it on the bid in order to demonstrate its funding capability.

Orkim has a fleet of 17 vessels that transport CPPs from refineries to various oil storage facilities. The average age of its vessels is 10 years. According to its website, five are three years old while the rest were built between 2009 and 2016, for an average age of 13 years. It also owns two liquefied petroleum gas tankers.

Last September, Orkim announced that it had secured a long-term contract for the charter of two vessels to transport petroleum products across Malaysia with Shell Malaysia Trading Sdn Bhd and Shell Timur Sdn Bhd, to transport oil products for the oil major’s downstream fuel business across Peninsular Malaysia and Sabah and Sarawak. The contract value and duration were not disclosed.

For its financial year ended Dec 31, 2023 (FY2023), Orkim’s profit after tax tripled to RM81.05 million from RM27.94 million in FY2022 on the back of a 4.2% decline in revenue to RM302.58 million from RM315.58 million previously.

This would peg the RM1 billion valuation at around 12 times its FY2023 earnings.

As at the end of 2022, Orkim had total assets of RM867.86 million, total liabilities of RM406.76 million and retained earnings of RM416.76 million.

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