SET-listed Gulf Energy Development Plc, one of Thailand's largest power producers, yesterday recorded a 27.8% rise from the opening price on its first trading day, with the issuing size worth 24 billion baht, the largest in 11 years.
The energy business holding company, with a portfolio of electricity, steam and chilled-water generating projects and other related businesses, placed 533.30 million new shares with a par value of 0.50 baht each for the initial public offering (IPO) at a price of 45 baht per share.
The IPO is considered the largest by market capitalisation on the first trading day in 16 years, at 96 billion baht.
TPI Polene Plc had the second-largest IPO (17.5 billion baht) this year, followed by B.Grimm Power Plc (10.4 billion) and TOA Paint Thailand Plc (6.1 billion), according to Stock Exchange of Thailand data.
Gulf Energy chief executive Sarath Ratanavadi said the company will use the funds raised from the IPO to finance the timely completion of gas-fired and biomass power plant projects and increase total installed production capacity by 11,125 megawatts through 2024 from the current 4,772MW.
The funds will also be used as working capital, to repay bank loans and reduce the company's debt-to-equity ratio to 1.6 times from 3-4, and to cut financial costs by 1-2%, Mr Sarath said.
"The IPO funds are enough to support the business expansion plan for six to seven years, and we aim to curb the debt-to-equity ratio to not exceed 2.5," he said.
Mr Sarath said the company has continued investing in power plants worth about 20 billion baht on average for the past 10 years.
In 2018, Gulf Energy plans to commence commercial operations at four small power plants with a capacity of 100MW each.
The company has a plan to prepare a bank credit line of 4-5 billion baht from foreign institutions such as Asian Development Bank (ADB), Japan Bank for International Cooperation and Thai banks for future business expansion, Mr Sarath said.
ADB has announced that it invested in 64 million shares of Gulf Energy worth 2.88 billion baht in a move to co-finance infrastructure projects in the Asia-Pacific region.
"Domestic consumption of electricity is expected to grow at a fast pace if the Eastern Economic Corridor and high-speed trains become effective," Mr Sarath said. "We also look to opportunities in neighbouring countries, as there is growing demand for electricity consumption."
Pichet Sithi-Amnuai, president of co-lead underwriter Bualuang Securities, said Gulf Energy's overall power production capacity will be the country's largest over the next three years if future projects are completed in a timely manner.
Bangkok Bank (BBL) yesterday bought a big lot of Gulf Energy shares: 106.45 million at 46.76 baht a share, worth 4.98 billion baht in total.
BBL president Chartsiri Sophonpanich cited the company's good growth potential as justification for the purchase.
GULF shares closed yesterday on the SET at 53.75 baht, up 8.75 baht, in heavy trade worth 18 billion baht. Market capitalisation at the end of the first trading day stood at 115 billion baht.
Separately, the SET closed at 1,694.39 points, down 0.2%, in turnover worth 65.5 billion baht.
Pragrom Pathomboorn, KGI Securities senior vice-president, said negative external factors have caused regional stock markets to slip 1-2%.
Concerns include the investigation into Russia's alleged involvement in US President Donald Trump's election victory, Mr Trump's recognition of Jerusalem as Israel's capital, and the latest North Korean missile test, Mr Pragrom said.
On the Thai bourse, local institutions sold some holdings in large-cap stocks to buy Gulf Energy shares for long-term investment, causing volatility in GULF's share price yesterday, he said.