Amidst a flagging economy and an increasingly desperate pandemic situation, Thai investors are seeking initial public offerings emblematic of the new Covid economy -- companies able to withstand extended lockdown measures and even thrive from changing consumer habits.
Thai financial markets have had a glut of what the Stock Exchange of Thailand's (SET) president Pakorn Peetathawatchai often refers to as "sexy" IPOs. Startups, logistics firms, medical and wellness, and cutting edge tech. Budding, possibly unicorn-bound, businesses that can capture the imagination of local investors and provide hope for a more dynamic economy to emerge from the grip of the virus.
Mr Pakorn may soon get the sexiness he is looking for with the possible SET listing of one of Thailand's most well funded startups, aCommerce, an e-commerce enabler based in the region that bills itself as "the largest e-commerce enabler in Southeast Asia".
Due to stiff IPO regulations in Thailand, the company must remain tight-lipped about its intentions, but it released a press release in June alluding to its intentions to list on the main board of the SET by hiring three independent board members.
aCommerce has not yet officially filed to list on the SET and does not appear on the SET website's list of companies under consideration for a listing.
"We look at ourselves as the plumbing of e-commerce," said Paul Srivorakul, aCommerce's group chief executive in an interview with the Bangkok Post. "I wouldn't really consider us a startup anymore since we have been around so long and have really built ourselves into an established company."
Since its founding in 2013, the company has acquired a slew of international brands as its clients such as Nestle, Unilever and Adidas, helping them navigate the complex logistics networks of Southeast Asia. Currently, it operates in five markets -- Thailand, Philippines, Indonesia, Malaysia and Singapore -- and is headquartered in Bangkok.
"When we first started, we saw Thailand on the cusp of this e-commerce explosion, but a lot of the brands and retailers did not have a solution to get their products out there," he said. "They wanted to build e-commerce capabilities but did not understand the domain knowledge or the technology."
The company currently boasts 161 brand clients, 70% compound annual growth rate since 2016 and 12 million unique end customers. It reported US$226 million in revenue between the third quarter of 2019 and the third quarter of 2020, and has raised over $100 million in funding.
According to aCommerce, the firm was growing at about 50-60% per year before Covid and then increased to 100% growth following the initial outbreak of the pandemic.
"Such high levels of pure top-line growth, however, are not our focus and we are not growing at that kind of level right now. We are more focused on quality top-line growth, which has operating leverage."
Mr Paul also says the company has achieved profitability in every market but its smallest one. In a earlier interview with the Bangkok Post, Mr Paul said profitability was one of the key goals of the company before embarking on an IPO.
Last year, he told DealStreetAsia that aCommerce planned to raise $200 million in a listing planned for 2021.
SETTING BOUNDARIES
While Thailand's ambitions of becoming a startup hub in Southeast Asia have floundered over recent years, aCommerce has managed to raise capital in a tough market and even take a possible lead in its regional market segment.
aCommerce's group chief executive Paul Srivorakul.
"The landscape is evolving constantly, where anything that is a media and content platform is eventually going to tie up with e-commerce," Mr Paul said.
"Zoom, for example, is becoming a platform for salespeople to set up a showroom, or Netflix as well is going into e-commerce with Netflix Shop. It's really exciting for brands because there are a lot of different digital experiences for the consumer."
E-commerce enablement is a tricky business to set parameters around as its scope continues to expand with new market innovations like social commerce and influencer marketing.
Essentially, aCommerce helps move products through brands' stores and even its own warehouses through its platform to a network of logistic companies, while offering a variety of sales options like B2C marketplaces like Shopee or Lazada, social media sales, and call centres.
The company helps its clients, many of which are based outside Southeast Asia, with local regulations and localisation strategies, and access to customer data.
"Working with Adidas, for example, is a very exciting brand in that they are very innovative in building experiences on its apps, being available on different marketplaces, on social platforms, and we are working with them across five different countries after starting with just one," he said.
"We can also centrally aggregate the data that we own from the end customer which helps us build out their presence in these different markets."
"In Indonesia, for their big releases -- like Yeezys -- we built out waiting rooms for customers and were able to leverage that FOMO and that exclusivity to build out a strong marketing campaign. It was really fun," Mr Paul said.
It is perhaps easier to define aCommerce through what it doesn't do -- it doesn't run an actual e-commerce marketplace nor does it buy and sell products itself.
STIFF COMPETITION?
aCommerce is not the only e-commerce enabler that claims to be the largest in Southeast Asia. SCI Ecommerce is an Alibaba-backed e-commerce enabler startup based in Singapore that also promotes itself as being the biggest with "No. 1 e-commerce solution provider in Southeast Asia", used as the tag on its website.
It boasts 267% growth between 2016 and 2020, but only $100 million in revenue in 2020. Neither aCommerce nor SCI release figures on profitability.
"Our smaller competitors may well show higher rates of growth as they are coming from a much lower base and do not have the same protocols and focus on the quality of revenue as we do," Mr Paul said.
"If and when the company makes any IPO filling then certain financial information on the company will be available publicly."
The battle of egos over a niche yet expanding market segment may seem immaterial to some, but it has enormous implications to Thailand's future economy if one of its hometown players manages to stake out a dominant position in the fast growing digital space largely controlled by firms from Singapore and Indonesia.
It could be seen as a test case for the kingdom's Thailand 4.0 strategy that claims robust advances and even greater ambitions, but largely serves as marketing jargon aimed at foreign investors.
aCommerce's market dominance and potential successful IPO could serve as a positive example of Thailand's potential as a startup-friendly country and draw more attention from venture capital to then fund more early-stage tech firms.
The company attributes much of its success to its measured approach to fundraising and its focus on sustainable growth.
"As you take a startup from zero to 1, you can either grow a startup as fast as you can, meaning you have to raise a heck of a lot more money and worry about being sustainable later on, or you could take a more measured approach which means raising less money than you need to, but we went for the latter approach," said Piers Bennett, aCommerce's group chief financial officer.
"I guess that's why we're not out in the press making bombastic statements, because that's what you need to do when you need to raise a lot of money, and we don't really need to do that right now."
