OCI Holdings pauses Malaysian polysilicon unit IPO amid market volatility

[MALAYSIA] OCI Holdings Co., a South Korean chemical manufacturer, has reportedly paused its plans for an initial public offering (IPO) of its Malaysian subsidiary due to recent market volatility. The company had been in discussions with financial advisors to list its Malaysian polysilicon unit on the Kuala Lumpur stock exchange, aiming to raise up to RM1.5 billion (approximately US$320 million) and valuing the unit at up to RM6 billion.

The polysilicon market, a key component in solar panel manufacturing, has seen fluctuating demand in recent months due to shifting global renewable energy policies and oversupply concerns in China. These factors have contributed to investor caution, particularly for companies like OCI Holdings Co., whose valuation is closely tied to the solar industry's growth trajectory. Analysts suggest that the delay may allow the company to reassess its pricing strategy amid these market dynamics.

The decision to delay the IPO comes amid a turbulent market environment, which has led companies to reassess their listing strategies. This move also highlights the challenges faced by companies seeking to enter public markets during periods of economic uncertainty.

In July 2024, sources familiar with the matter indicated that OCI Holdings Co. was considering listing its Malaysian polysilicon unit on the Kuala Lumpur stock exchange to raise as much as RM1.5 billion. The IPO was projected to value OCI Malaysia at up to RM6 billion, potentially making it Malaysia's largest listing since Mr DIY Group's IPO in 2020.

Industry experts note that Southeast Asia's renewable energy sector has attracted significant foreign investment, with Malaysia emerging as a regional hub for solar manufacturing. The country's competitive energy costs and supportive policies have drawn players like OCI Holdings Co., which could benefit from long-term growth in the region. However, short-term market headwinds appear to have tempered immediate IPO ambitions.

The Malaysian government has been proactive in attracting IPOs, with the Securities Commission Malaysia (SC) and Bursa Malaysia Berhad (Bursa Malaysia) jointly committing to expedite the approval process for IPOs on both the Main and ACE Markets. Since March 1, 2024, the approval timeline has been reduced to three months, contingent upon principal advisers and sponsors addressing regulatory queries within five market days.

Despite these efforts to streamline the IPO process, OCI's decision to delay its Malaysian unit's IPO underscores the complexities companies face in navigating market conditions and regulatory landscapes. As global markets continue to experience fluctuations, companies may remain cautious in pursuing public listings, opting to await more favorable conditions.

The broader IPO market in Southeast Asia has seen mixed performance in 2024, with some high-profile listings underperforming post-debut. This trend has led to increased scrutiny from investors, who are prioritizing profitability and sustainable growth over speculative gains. OCI Holdings Co.'s pause reflects this cautious sentiment, as the company likely seeks to avoid a lukewarm reception from the market.

OCI Holdings Co. produces polysilicon used in semiconductors and solar panels, with a plant in Sarawak that produces 35,000 metric tonnes of solar PV polysilicon annually. The company established a regional headquarters in Kuala Lumpur in April 2024 to expand its presence in Southeast Asia.

As of now, OCI has not provided a revised timeline for the IPO of its Malaysian unit, and it remains to be seen when the company will proceed with its public listing plans.