The Chain: Matang’s IPO Lacks RSPO Commitment, Its IPO Financing by Insas Berhad Subsidiary May Conflict With Insas Board of Director’s Policy


Chain Reaction Research reported that Insas Berhad’s wholly owned subsidiary M&A Securities is the adviser, sponsor, and underwriter for Matang Bhd’s upcoming $3.8 million IPO on the ACE Market of Bursa Malaysia. Matang has a 1,096 ha oil palm plantation landbank in Peninsular Malaysia.

Matang is proposing to issue 130 million new shares tentatively scheduled January 17, 2017, available to the Malaysian public at the offer price of $0.03 per share. Based on the IPO and its paid-up share capital, its market capitalization would be $52 million upon listing.

Matang’s stated use of proceeds from the IPO are:

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  • 5% – or $2.7 million – would be used for general working capital to finance Matang and its subsidiaries’ day-to-day operations over the next five years.
  • 1% – or $570,000 – would be used for capital expenditure to boost its operations of Matang oil palm plantations with 1.5% used for replanting of 1.5 percent of its 1,096 ha landbank in Johor, Malaysia.
  • 9% – or $490,000 – would be to defray the listing expenses for the IPO.

Questions remain whether the IPO adheres to the environment, social, and governance (ESG) policies and requirements of the Board of Directors of Insas Berhad, which wholly owns M&A Securities. This is because Matang does not disclose any policies in its securities filings regarding its approach to corporate social responsibility.

Insas Berhad’s Board of Directors-level ESG policy states that its Board of Directors’ Roles and Responsibilities require the Board to be “mindful of the importance to promote sustainability strategies while conducting the Group’s businesses and will embed the environment, social and governance elements in its corporate strategy.” It is not clear if Matang’s lack of disclosure contradicts Insas Board’s requirements.

Similarly, it is unknown whether Matang’s proposed listing follows the sustainability listing requirements of Bursa Malaysia regarding corporate governance criteria to gain approval to be listed. The initial prospectus for the proposed IPO is not available on either the Securities Commission Malaysia or Bursa Malaysia websites.

Matang is not a member of the Roundtable of Sustainable Palm Oil.

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Gabriel Thoumi, CFA, FRM works as Director Capital Markets at Climate Advisers where he manages global financial analytics focusing on mitigating systemic climate risk while advising on “greening” capital markets. He has 18 years of experience managing and deploying frameworks to improve global capital markets sustainability through risk mitigation and return enhancement. Previously, for Calvert Investment Management, he valued global equity, index, and fixed income portfolios and their component positions in the utilities, energy, materials, chemicals, and financial sectors. He worked on quantitative index construction and asset allocation strategies. He engaged Fortune 500 CEOs on approaches to mitigating climate risk using financial risk management tools. He led initiatives to improve financial accounting of exchange-listed products and incorporated natural capital into financial tools. He has also worked at Morgan Stanley's carbon offset company, Wells Fargo Capital Management, and American Express. He is an adjunct at John Hopkins University.
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