Hibiscus Petroleum’s fundraising signals positive outlook for O&G

A fundraising programme by Hibiscus Petroleum Bhd to raise up to RM2 billion through convertible redeemable preference shares (CRPS) could signal a return of mergers and acquisitions (M&A) in the oil and gas (O&G) industry.

As advances in the development of Covid-19 vaccines continue to gather pace, consumer sentiment is increasing globally and, with that, the forecast demand for O&G.

This has pushed petroleum prices northwards. M&As in O&G have started to pick up momentum from the second quarter.

According to GlobalData — a consultancy that provides data-driven analysis in various industries worldwide — M&A deals in the sector in 2Q2020 increased 114.2% from the preceding quarter to US$23.95 billion.

However, this is still some 68.8% lower than the US$76.8 billion average over the preceding four quarters. During 2Q2020, the Middle East and Africa region topped the list, with total announced deals of US$11.29 billion.

Against this backdrop, Hibiscus is seizing the opportunity to raise funds to acquire producing assets in Southeast Asia. Although the programme aims to raise RM2 billion, Hibiscus is issuing the CRPS in tranches, with the first two issued for a sum of RM203.6 million.