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Logo of Phnom Penh Post newspaper Phnom Penh Post - PPWSA sets an IPO date

PPWSA sets an IPO date

PPWSA sets an IPO date


Phnom Penh Water Supply Authority aimed to raise US$20.4 million in a long-awaited initial public offering scheduled for mid-April, the company said yesterday during its first pitch  to investors.


“We’ve targeted trading for the 18th of April,” said Han Kyung-tae, managing director of Tong Yang Securities (Cambodia), an underwriter for state-owned PPWSA and Telecom Cambodia.

Government officials, however, said trading could be pushed back again if investor demand for PPWSA’s IPO was higher than expected.

PPWSA’s pitch, or “road show”, is expected to last two weeks as the company holds a number of information sessions for investors to prove its readiness to operate as a public company.

“I do believe the road show and book-building will help a large number of people understand more about the company when making a decision to buy our shares,” PPWSA general director Ek Sonn Chan said.

During the next two weeks, bids will be taken in what is known as a book-building process as a way of setting a price for the IPO.

PPWSA would call for bids between $1 and $1.57 a share, the company said.

PPWSA said it expected to sell about 13 million shares – or a 15 per cent interest in the company – in the IPO, while retaining the remaining 73.9 million shares as a majority stake.

About 9.1 million, or 70 per cent, of the 13 million shares would be sold during the book-building process, scheduled to conclude on March 13, PPWSA said.

The remaining 3.9 mill-ion shares would be sold to investors who did not take part in, or whose bids were unsuccessful during, the book-building process.

This “subscription period” for the remaining investors would be between March 29 and April 4.

The money raised would be used to pay down debt to the World Bank and the Japan International Co-operation Agency, capital expenditures for pipe expansion and water- tower construction, working capital and new-business expansion, PPWSA said.

PPWSA operates three water-treatment stations in the capital, serving about 90 per cent of the population, according to the company’s prospectus. Two other stations are located in Meanchey district.

The company’s revenues increased to $26.3 million in 2010, up from $3.5 million in 1997, the prospectus said.

PPWSA expects revenues to grow to $31 million this year.

General director Ek Sonn Chann said prices for water would not change because the company was trading publicly, and PPWSA would retain its majority stake.

Any change in prices would be decided by the company’s board of directors as a result of market conditions, he said.

Some investors at yesterday’s road show said they were excited about the returns that might be earned from PPWSA stock.

The potential for growth in water works in Cambodia – many parts of which did not have access to clean water – was large, making the IPO an attractive buy for investors, JM-Asia Cambodia managing director Philip Fong said.

“For me, it’s the right investment. Water is something that everybody needs,” Fong said.

Business Research Institute for Cambodia chief economist Suzuki Hiroshi said he had received significant interest from Japanese investors eyeing the Cambodian market.

“I believe that the IPO will be welcomed by many investors, not only from Japan but also from neighbouring countries,” he said, noting  the relative success of stock exchanges in Southeast Asia.

Given the relatively quick road show and initial sale of shares, Securities and Exchange Commission of Cambodia director-general Ming Bankosal said trading could be delayed if public interest was high during the next two weeks.

Book-building could take months, he said.


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