Capital crush

Capital crush

Family-owned businesses are rushing to list on the SET and MAI to raise working funds

As the pandemic slogs into its second year, Thai companies are increasingly looking to capital markets as a source of funding during a time of unreliable investor sentiment.

The Thai initial public offering (IPO) market is expected to remain active for the next few years, grabbing a leading spot in Asean, spurred by a slow economic recovery that is forcing unlisted firms with low liquidity to seek working capital.

Businesses run by large families are now more interested in listing on the Stock Exchange of Thailand (SET) to raise funds for expansion and liquidity enhancement after suffering from the pandemic for over a year, said Anuwat Ruamsuke, managing director of Phatra Securities.

Mr Anuwat said these family-owned companies have good fundamentals, showed strong performance, and have bright business prospects. They are ready to raise funds in the IPO market or the primary market, and list on the SET, Market for Alternative Investment (MAI) or secondary markets.

He said the pandemic has affected a broad expanse of businesses, especially large, unlisted family-run companies that are typically profitable under normal circumstances, but are experiencing difficulties from low liquidity. These firms feel the need to increase their working capital through IPOs and fundraising on stock exchanges, said Mr Anuwat.

The technology industry is an attractive sector and the SET is revising listing rules to facilitate faster listing of e-commerce businesses, he said.

"I believe in the next few years, the Thai IPO market will continue to grow as more companies are interested in entering exchanges," said Mr Anuwat. "Compared with other countries in the region including Singapore, the Thai stock market is a regional leader, recording the highest value for IPOs and the most liquid trading value in the secondary markets."

FUNDING FRENZY

Phatra Securities has been successful in bringing large companies to the SET such as PTT Oil and Retail Business Plc (OR), which it listed last quarter. The company also serves as an adviser for the planned listing of Ngern Tid Lor Plc (TIDLOR) this month.

Manpong Senanarong, senior executive vice-president of the SET, said he expects the number of companies listing on the SET and MAI and the total value of funds raised this year to exceed last year.

In the first quarter of 2021, five companies were listed.

In the second quarter, at least five companies are scheduled to list on the SET and MAI. The second and fourth quarters are normally considered listing season because they are periods when companies have finalised their financial statements.

However, as a result of the pandemic, some companies have postponed their IPO plans because they need to adjust their business strategies and structure to adapt to a new business environment.

Regardless of how the pandemic plays out, if a company is ready to prepare its accounting and financial information, request an IPO filing from the Securities and Exchange Commission (SEC), and ask for permission from SET to list its stock, that company can raise funds on the capital market.

Businesses eager for investment are technology firms and companies that are still operational, but have been heavily affected by the pandemic, said Mr Manpong.

With Thailand suffering from a third wave of the pandemic and mass inoculation a distant dream, it is uncertain how long it will take to control the outbreak.

The economic uncertainty may negatively affect business performance, as evidenced by some foreign markets that have been overwhelmed by the pandemic, he said.

BILLION-BAHT LISTINGS

According to the SEC, between January and March five companies launched IPOs with a total offering value of 56.2 billion baht. The top three companies with the highest offering values were OR, which raised 54 billion baht, followed by Rojukiss International Plc (KISS) with 1.37 billion, and President Automobile Industries Plc (PACO) with 364 million baht.

Between April 26 and May 4, three companies listed on exchanges: AssetWise Plc (ASW), a property developer focusing on residential including condos, which listed on the SET; Prosper Engineering Plc (PROS), a mechanical and electrical engineering service contractor, which listed on the MAI; and Proen Corp Plc (PROEN), an information communication and technology company and provider of an international data centre, which listed on the MAI.

TIDLOR expects to list on the SET on May 10 this year. It is a big non-banking company licensed by the Bank of Thailand that focuses on vehicle title loans, hire-purchase financing services for used trucks, and other types of loans, include life and non-life insurance brokerage services under the brand Ngern Tid Lor.

TIDLOR offered an IPO of no more than 907,428,600 shares (39.1% of total issued shares after the IPO), divided into newly issued shares of no more than 210,816,700 shares and existing shares offered by shareholders of no more than 696,611,900 shares. Over-allotment shares (greenshoe) are no more than 136,114,200, with the IPO price set at 36.50 baht per share.

CLOGGED PIPELINE

The SET indicated 10 companies are planning to launch IPOs: Don Muang Tollway Plc (DMT), Mena Transport Plc (MENA), NSL Foods Plc (NSL), AMR Asia Plc (AMR), Civil Engineering Plc (CIVIL), Srinanaporn Marketing Plc (SNNP), Siam Technic Concrete Plc (STECH), Pinthong Industrial Park Plc (PIN), Clover Power Plc (PV) and Chotiwat Manufacturing Plc (CMCF).

Another eight companies plan to list on the MAI: nForce Secure Plc (NFSC), Addtech Hub Plc (ADD), Ditto (Thailand) Plc (DITTO), Winnergy Medical Plc (WINMED), Bluebik Group Plc (BLU), JSP Pharmaceutical Manufacturing (Thailand) Plc (JP), Saintmed Plc (SMD) and Delta Paint Plc (DPAINT).

In terms of real estate investment trusts, the pipeline includes B&G Leasehold Real Estate Investment Trust (BGREIT), KTBST Mixed Leasehold Real Estate Investment Trust (KTBSTMR), Supalai Real Estate Investment (SPALIRT), Grande Royal Orchid Hospitality Real Estate Investment Trust with Buy-Back Condition (GROREIT), and INET Leasehold Real Estate Investment (INETREIT).

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