Challenges and Criteria for Public Listing: A Case Study of Reach Energy in Malaysia

Running head: PUBLIC LISTING CHALLENGES
Public Listing Challenges
Name of the Student
Name of the University
Author Notes:

1PUBLIC LISTING CHALLENGES
Table of Contents
Introduction................................................................................................................................2
Background of the company......................................................................................................3
Parties involved..........................................................................................................................5
Government Bodies............................................................................................................5
Bursa Malaysia...................................................................................................................5
Financial Department.........................................................................................................6
Board of Directors..............................................................................................................6
Shareholders.......................................................................................................................7
Criteria of Listing.......................................................................................................................7
Benefits..................................................................................................................................8
Challenges................................................................................................................................11
Regulation............................................................................................................................11
Expertise...............................................................................................................................12
Conclusion................................................................................................................................16
REFERENCES.........................................................................................................................18

2PUBLIC LISTING CHALLENGES
Introduction
In accordance with the present changes in the General Election the government is
reviewing the ongoing oil and gas project in Malaysia so as to remove the disputes. Though
the price of the crude oil is very low the sectors remain important to the country as it
contributes only twenty to around thirty percent of the country’s gross profits. There are
around three thousand and five hundred oil factories in Malaysia which work both
domestically and internationally. The multiplying effect which is generating the Petroliam
National Bah or the PETRONAS, the national oil company in Malaysia. Reach Energy has
also witnessed a proper marginal growth in the oil production and reservation whereas the gas
production of the company continues to decline in the market (Awalludin, Hashim and
Nadhari 2015). The Malaysian government is trying to take over the water producing oil
fields in the area and is encouraging to invest in the Enhanced Oil Recovery or the EOR so
that the development of water depth oil fields can be found out. The company is finding out
few new oil reserves in the coast of the sea in the Northern Borneo which is between 200 to
1200 meters deep, but is very costly to extract the resources from that deep (Ruqaishi and
Bashir 2013)
Initial public offering or IPO which is more popularly known as the stock market
launch is a type of the offering by the public where the company shares sold off to the visitors
of the institution as well as the retail investors. An initial public offering is written by on or
than one investment bank of the company which also arranges the shares which will be listed
by the company itself. This process only happen when a private owned company is
transformed into a public owned company (Mansor, Alwi and Anwar 2013). The initial
public offerings are thus owned by the company which will raise the new equity investors in
the market which will enable an easy trading for the existing holders. It also shows how the

3PUBLIC LISTING CHALLENGES
future capital risers re becoming enterprises dealing in public. Research Energy Berhad is an
acquisition company for the gas and oil exploration in Malaysia. The company majorly
focusses in the development of hydrocarbon resource in the Asian Pacific Region. The
company acquires assets in various areas where it can perform the exploration and production
of the oil and gas development as well as the productivity activity. It has over 40 target
offshore points in five countries targeting the oil and gas production phrase (Oh,
Hasanuzzaman and Chua 2018)
The following paper will thoroughly discuss on the background of the company,
securities commission of Malaysia which might have a plenty of queries regarding the
submission of the Initial Public Offerings, so as to ensure a better growth in the near future. It
will also be discussed that why the company is facing difficulties in looking and selecting the
candidates as independent who have very less experience to the industry which is involved in
the company.
Background of the company
The Reach Energy logo was designed to emanate strength and brightness. The
Reach Energy was established in Malaysia which was under the Companies Act 1956 as a
private company on 7th February 2013 as Reach Energy. The company later on converted
itself to a public company on 2nd August 2013 and renamed it as Reach Energy Berhad.
Reach Energy Berhad is now the 4th biggest Special Purpose Acquisition Company (“SPAC”)
IPO Malaysia (Shafie, Masjuki and Andriyana 2013). It is an oil as well as gas production
and exploration company. The vision of Reach Energy is to be an independent Malaysian
based Gas and Oil Company and operating in both domestic and global regions. Reach
Energy in the year 2016 had acquired 60% of the equity interest in Palaeontol B.V. which is
owned by the Palaeontol Cooperative U.A. which is wholly owned by the MIE Corporation

4PUBLIC LISTING CHALLENGES
which was under the board of the stock exchange of the Hong Kong Limited. The transaction
which was implemented for the purchase was around USD 175.69 million. The company
owns an area of 850km2 in a southwestern region of the Republic of Kazakistan (Hossain,
Saidur and Fayaz 2015)
The mission of the company is growing to the upstream reserves in petroleum,
developing a strong technical base in the market, developing a strong value among the
shareholders, increasing more oil and gas productivity. Reach Energy was given a three year
time so that the can find out their qualifying assets under the criteria which was set by the
Securities Commission of Malaysia, that is the production fields which are in the Asian
Pacific regions. After scrutinizing more than fifty assets it has entered into condition of a
triple party condition where the sale as well as he purchasing agreement was proposed for the
Palaeontol COOP and MEIH who are the vendors for the proposed acquisition. The oil as
well as the gas industries provides along with the regional and the global prints are well seen
over here. If going forward with the report with the oil and gas industries in Malaysia then it
can be found out that the spots are bright in the vessels of marine, installations in the offshore
and few fabrications. Although the gas and the oil which are exposed to the exploration and
the developmental activities which offers the greatest leverage to the operations (Manan,
Baharuddin and Chang 2015) The global apex of the budget which was set for the upstream
of the activities which has been cut down substantially after the collapse of the price of oil
and gasses. Petronas has also signaled a very monotonous growth of demand for the majority
of the upstream for the services which are provided for the next three years. The demand for
the bright spots are increasing with the demand for the rise of the oil and gas exploration and
development analysis (Zaman et al. 2015).
Tenders which are new and has very recently contracted securely with Reach
Energy are mainly driven by the Pan Malaysia under a single umbrella contract, which is

5PUBLIC LISTING CHALLENGES
similar to the letter of the undertaking along with providing a specified budget and a proper
framework. Therefore a constant growth is expected by providing more offshore instalments
of the factory as well as fabrication. Nonetheless Reach Energy is also facing various
problems and difficulties in securing the funding debt so that they can undertake few new
projects (Barimani, Safari and Salam 2014). The company is also seeking various ways to
invest. The company is also seeking to invest more on the lower assets of the company so that
they can generate a good cash flow for the working capital. This can put the company to a
great score and they can buy more projects in the upcoming years to excel in the market.
Parties involved
Government Bodies
The Reach and Energy have large capital budgets which are counterparts of the IOC
department. They now are seeking cost effective way for funding their domestic resource and
are developing plans or are financing from the international assets. The partially privatized
national oil companies are now in a competition with the other oil companies on global
capital market. The level of the government ownership of the shares are in some extent to
control the operations on the capital markets (Zakaria, Purhanudin and Palanimally 2014).
Bursa Malaysia
The work of Bursa Malaysia is to provide the company, government as well as other
groups or parties to sell their securities in investing the public by offering a vast range of
products and services. The services mainly includes deposit service, trading, clearance,
services and products which are based on the derivatives and equities of the company. The
Bursa Malaysia also maintains an official website which contains information related to the
market shares of the public as well as the private companies. The website posts media
release, public offerings, as well as various investor’s education programs. The Bursa