PUTRAJAYA, Malaysia—Palm oil producer IOI Corp. said Tuesday it is spinning off its real estate business in a $4.22 billion listing on the Malaysian stock exchange by mid-December, joining at least three other companies in tapping the country's capital market for billions of dollars in cash.
Malaysia's initial public offering market has been buzzing in the past week after a lull in recent months because of uncertainties ahead of the May 5 general elections. The listing is the country's biggest so far this year and will help cement the Malaysia's position as one of Asia's hot spots for deals.
"The IOI property business is on a stronger footing now. Following the firm's delisting, we have built up the property land bank in strategic locations, so it is about time we unlock value in the property business," Malaysian tycoon and IOI Executive Chairman Lee Shin Cheng said.
In 2009, Malaysia's fourth-largest listed palm oil producer by acreage bought out its property arm for 310 million ringgit ($103.4 million) in cash and shares, valuing the unit at roughly 1.3 billion ringgit.
Malaysia's fourth-largest listed palm oil producer by acreage will inject its property development, real-estate investments, land and other related businesses into IOI Properties Group Sdn. Bhd. in exchange for shares in IOI Properties, IOI Corp. said in a statement to the Malaysian stock exchange. IOI Corp. will also distribute one share in the new unit for every three held by existing shareholders.
Mr. Lee said IOI Corp. will raise 1.9 billion ringgit in a sale of existing shares in IOI Properties, and will use 1.8 billion ringgit to repay bank loans. The remaining funds will go toward listing expenses.
New-share issuance in Kuala Lumpur has soared in recent years, and leapt to the top spot in Southeast Asia last year with almost $12 billion raised. So far this year, the country ranks fifth in the region, according to data tracker Dealogic.
Shares of IOI Corp. had been suspended since Thursday pending the listing announcement, and closed 2.4% higher at 5.46 ringgit Tuesday.
Apart from IOI Properties, long-haul budget carrier AirAsia X plans to raise up to $300 million in an initial public offering in Malaysia, and Iskandar Waterfront Holdings Sdn. Bhd. also plans to raise $300 million ahead of a domestic listing later this year.
IOI Properties owns vast tracts of land in Iskandar Malaysia, a special economic region in the southern state of Johor that comprises private apartments and houses. Mr. Lee said the company expects buying interest from investors from neighboring Singapore to remain firm because of government measures to cool the city-state's property market and restrict land ownership.
The property unit will own assets that are valued at more than 17.9 billion ringgit ($6 billion), IOI Corp. said, making it the biggest listed property firm in Malaysia by assets.
Singapore, which has the highest percentage of millionaire households in the world, is also Asia's most expensive property market after Hong Kong, according to property consultancy Knight Frank.
AmInvestment Bank Bhd. and RHB Investment Bank Bhd. are the joint advisers and coordinators for the IOI Properties deal, while Standard Chartered PLC is also a joint global coordinator.