Reach Energy Plans to Acquire an Upstream Asset Within 2 Years of IPO

Malaysia's Reach Energy Bhd, a special purpose acquisition company (SPAC) planning to raise $236.93 million (MYR 750 million) through a listing on stock exchange Bursa Malaysia, intends to aquire its first upstream oil and gas asset within one to two years of its initial public offering (IPO), according to local daily The Star Friday.

Reach plans to purchase a brownfield petroleum asset in Asia Pacific in order to generate revenue within two years of the acquisition as the firm seeks to establish itself as an independent oil and gas exploration and production company with domestic and global operations.

“We are not short on acquisition targets and I’m confident it will take us less than three years to complete our qualifying acquisition (QA),” Reach's Managing Director Shahul Hamid Mohd Ismal said.

“Our independent researcher has found that these assets (which fit Reach Energy’s criteria) are available. Oil majors are also divesting their stakes in mature fields ... An acquisition will take months to complete, so we don’t intend to waste time or money. We will make our QA in the shortest time possible,” he added.

The listing, planned for Aug. 15, drew seven cornerstone investors who will take up a combined 210 million shares and warrants, or 16.45 percent of Reach’s enlarged share base.

SPACs, which are shell firms with no operations or income-generating business at the point of listing, will undertake an IPO to raise funds to acquire businesses or assets, otherwise known as QA.

“The quantum of proceeds raised from our IPO will place us in a strong position to acquire brownfield assets which can generate early revenue to help fuel our future growth. We want to be the operator of these assets, as the key to success in this arena is institutionalizing low cost operation,” Shahul said.

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