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Share price set for port’s $5.2M IPO

Phnom Penh Autonomous Port (PPAP), the state enterprise that operates Cambodia’s second-largest port, priced its shares at 5,120 riel ($1.26) following a bookbuild to institutional investors as it looks to raise $5.2 million in an initial public offering, according to disclosure documents released yesterday.

The share price, which fell into the middle of the 4,405 riel to 6,302 riel ($1.08 to $1.55) range offered in the bookbuild, gives the company an implied market capitalisation of $26 million.

The result suggests investor interest may not have been as high as some expected, but the mid-range strike price could support the stock’s value once traded, said Thomas Hugger, CEO of investment firm Asia Frontier Capital.

“The pricing was below the midpoint and thus indicates that interest from institutional investors was not really very strong,” he said. “However, for successful investors it is good news since there might be some upside left when the stock is traded in the secondary market.”

The government has a lot riding on PPAP’s initial public offering, which it hopes will invigorate the country’s capital market. The Cambodian Securities Exchange (CSX) has struggled to attract investors since launching in 2011 and has just two listed companies.

Stephen Higgins, managing partner of investment firm Mekong Strategic Partners, said PPAP’s share price “strikes an appropriate balance between generating a decent return for the government as the seller, while being low enough to ensure there is an attractive secondary market in the stock”.

He said the pricing “should see a lot of support for the IPO during the subscription period and then in the secondary market once it has listed”.

PPAP says it plans to use the capital raised by floating 4.1 million shares on the CSX, a 20 per cent stake, to fund its expansion. The IPO will open for subscription tomorrow, with the listing scheduled for December 11.

A release by Yuanta Securities, the sole underwriter and book-runner of the IPO, indicated that 44.95 per cent of the share offering had been allocated to strategic investors, while 45.05 per cent was allocated to successful bookbuild investors and subscribers.

Another 10 per cent was reserved for the company’s employee stock ownership plan.

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