SET upbeat on IPO market outlook for the year ahead
Despite a host of growing uncertainties, Thailand’s IPO market outlook this year remains on track, though market conditions will determine the listing timing, says the Stock Exchange of Thailand (SET).
Manpong Senanarong, senior executive vice-president and head of the issuer marketing division at the SET, said the exchange expects many companies to launch IPOs in the second half, as they are waiting for favourable market timing to list on the bourse.
There are many IPO deals in the pipeline, including a large deal worth about 100 billion baht and which is identified as the first foreign firm to list on the SET, Mr Manpong said.
Among the companies that have submitted their IPO filings are SCG Packaging Plc, Siamrajathanee Plc, Samart Aviation Solutions Plc and Sri Trang Gloves Thailand Plc.
PTT Oil & Retail Plc, which includes gas stations, coffee shops and convenience stores, is expected to begin its IPO process soon.
The SET has not estimated total IPO size for this year because of difficulty in predicting future situations, Mr Manpong said. Companies that are ready to launch their IPOs may decide to delay depending on stock market conditions, he said.
In 2019, market capitalisation generated from allocating IPO shares to the general public rose considerably, to 384 billion baht from 183 billion baht a year earlier.
The bourse does not have a targeted market cap from IPOs this year, citing many prevailing negative factors, but
‘‘ CRC is a good example of a major IPO where the share price has minimal volatility. MANPONG SENANARONG Senior executive vice-president and head of the issuer marketing division, SET
the hope is that market sentiment will improve in the second quarter.
The coronavirus epidemic is among a multitude of factors derailing investor confidence. The equity sell-off by institutional investors and foreign investors totalled 13 billion and 30 billion baht, respectively, in the year to date as of Feb 20.
Against the backdrop of uncertainty and tepid economic growth, one of Thailand’s largest family-owned conglomerates marked its first trading day on Feb 20, becoming the country’s largest-ever IPO by market cap.
Central Retail Corporation Plc (CRC), Thailand’s largest retailer and the retail arm of Central Group, reportedly raised funds of 78.1 billion baht after setting the IPO price at 42 baht per share for up to 1.69 billion IPO shares and an overallotment option of 169 million shares.
Despite analysts’ previous expectations of a higher closing price, CRC shares edged down to close below the IPO price on the first trading day, settling at 41.75 baht per share.
A greenshoe option of 169 million shares, representing 10% of total IPO shares, can be exercised if the IPO price trades below 42 baht per share and must only be exercised within 30 days.
“CRC is a good example of a major IPO where the share price has minimal volatility,” Mr Manpong said. “There are many factors supporting CRC’s share price [based on the company’s fundamentals].”
Anuwat Ruamsuke, managing director of Phatra Securities, said the company has some major IPO deals in the offing, but the listing decision will depend on market conditions and the IPO filing process.
Major IPO deals are more complicated in terms of planning for business structuring and the listing process, Mr Anuwat said.
A greenshoe option is one of the tools to manage share price volatility for the first stage of trading, besides companies’ business fundamentals and the IPO price setting, he said.
Financial advisory companies also must balance the needs of issuers and investors to strike a reasonable IPO price.
In general, the IPO price will favour investors by discounting 10-15% from the company’s fair value price, while financial advisory companies have to consider reducing share price volatility after listing on the bourse.
For major IPO deals, the majority of IPO shares will be distributed to institutional investors, while retail investors will take the minority, Mr Anuwat said.