EPF yet to make a move on 2025 IPOs, all eyes are on MMC Port's listing

New Straits Times

5 days ago

KUALA LUMPUR: With RM1.25 trillion in assets under management, the Employees Provident Fund (EPF) has yet to make a splash in any of the 33 initial public offerings (IPOs) so far this year.
This quiet stance comes despite a bustling IPO pipeline. Bursa Malaysia is targeting 60 listings in 2025 with a combined market capitalisation of RM40.2 billion.
While EPF has never been a frequent IPO investor, its absence from the 2025 crop so far stands out, especially after the fund backed three of the biggest listings last year.
In 2024, EPF took substantial stakes in Johor Plantations Group Bhd and Prolintas Infra Business Trust during their IPOs and later emerged as a major shareholder in 99 Speed Mart Retail Holdings Bhd.
These three listings were among the top five IPOs of the year, which together contributed RM20.32 billion, or nearly 65 per cent of the year's total IPO market capitalisation.
*Picking the giants*
EPF first surfaced in 99 Speed Mart on June 4 this year, acquiring 421.79 million shares or 5.02 per cent. That stake has since increased to 428.58 million shares or 5.10 per cent as of July 1.
The convenience store operator, which listed in September 2024, was Malaysia's largest IPO in seven years.
The stock jumped 13.9 per cent on debut, closing at RM1.88 from an IPO price of RM1.65. As of last Friday, it was trading at RM2.20, marking a 33.3 per cent gain since listing.
Speed Mart joined the FTSE Bursa Malaysia KLCI less than a month after its debut, a rare feat. It also declared a dividend policy of paying 50 per cent of net profit twice a year.
Meanwhile, Johor Plantations Group saw EPF come in from the start. On its July 2024 listing, the fund picked up an 8.89 per cent stake, later increasing it to 10.23 per cent.
The stock debuted at 83 sen and ended its first trading day at 90 sen, up 7.14 per cent. As of July 4 this year, it was trading at RM1.20, a 44.6 per cent rise since listing.
The group also commits to paying at least 50 per cent of its profit after tax and minority interest as annual dividends.
Then there is Prolintas Infra Business Trust, where EPF acquired a 6.18 per cent stake during its March 2024 IPO at 95 sen per unit. That has since grown to 7.87 per cent as of July 1.
The units were last traded at 96 sen, but what makes Prolintas especially appealing to income-seeking investors is its policy of distributing at least 90 per cent of its distributable income each year.
*Mixed IPO performance*
This year's IPO landscape has been more of a mixed bag. The first seven debutants posted strong gains, between 8.33 per cent and 98.86 per cent, led by Oriental Kopi Holdings Bhd.
But the euphoria didn't last. Since ES Sunlogy Bhd debuted flat on February 20, IPO performances have seesawed, tilting more towards the red than the green.
Among this year's headline deals is Eco-Shop Marketing Bhd, which raised RM974 million, Malaysia's largest IPO in eight months. The stock gained six per cent on debut and last traded at RM1.27.
Industry watchers say EPF may be taking a more cautious or selective approach, possibly due to valuation concerns, sectoral fit, or broader market uncertainty.
Compared to last year, many of this year's listings have been in technology, digital services and smaller industrial segments, which may fall outside the fund's typical investment profile.
Bank Muamalat chief economist Dr Mohd Afzanizam Abdul Rashid said two key factors could explain EPF's current stance. One is heightened risk aversion amid global uncertainty, which may have prompted the fund to increase exposure to fixed income assets.
"That would mean fixed income markets would be the natural hedge for the pension funds to preserve its capital and at the same time, providing some capital appreciation," he said, noting that bond prices typically rise as yields fall in a rate-cutting environment.
The other factor, he said, is scale. Many of this year's IPOs are relatively small compared to the size of EPF's portfolio, which may reduce the economic incentive to participate.
Economist Geoffrey Williams said EPF's investment decisions are largely shaped by its strategic asset allocation framework, which prioritises long-term positions over short-term IPO gains. The fund is also more likely to engage with high-capitalisation companies rather than smaller offerings.
"EPF has a long-term investment strategy based on its strategic asset allocation guidelines. So generally it will look at long-term investments even if IPOs offer quick returns in the short term," he told Business Times.
He added that EPF's hands-off approach in smaller IPOs could help create room for other institutional investors to participate, which in turn supports market confidence and avoids criticism of favouritism.
"It is important for EPF not to interfere too much [in] the equity markets because this crowds out smaller investors," he said. "It is better to allow space for other institutional investors to support IPOs."
Ultimately, he said, the fund's investment strategy "must be determined by long-term aims and conducted as independently as possible based on market conditions."
There is also the matter of timing. With global headwinds, from trade tensions to geopolitical instability, clouding the outlook, EPF could simply be biding its time.
*All eyes on MMC Port*
There's still plenty of runway left. With 27 IPOs to go before year-end, one big listing could turn the tide.
Top of the watchlist is MMC Port Holdings Bhd, tipped to stage Malaysia's biggest IPO in over a decade. Parent company MMC Corp is planning to sell up to 30 per cent of its port arm, having already lodged a draft prospectus with the securities regulator.
The deal is likely to hit the market in late Q3 or early Q4.
Whether EPF will seize the opportunity remains to be seen, but if it does, the market will be watching closely.