Cambodia will launch fund unit offerings of the Collective Investment Scheme (CIS) on September 8. They aim to increase market liquidity and expand funding sources for local companies to raise funds through the capital market.
The CIS comes on the heels of a Prakas calling for its establishment by the Ministry of Economy and Finance on July 20.
According to the Securities and Exchange Regulator of Cambodia (SERC), which issued a notification on the prakas on July 26, the CIS is a money pool or any cash equivalent set up via an issue of fund units or an electronic system, including crowdfunding.
The establishing public funds, private funds or a real estate investment trust must be approved by the SERC.
Once the fund is established, the fund management company would invest in any CIS projects approved by SERC to generate financial benefits or other benefits, such as rights or interest on the property for the investors.
Essentially, investors are cash contributors of the fund with the fund management company investing on behalf of the investors.
A CIS can benefit investors and related companies, as well as the nation, in a number of ways.
SERC director-general Sou Socheat told The Post on September 6 that the launch of the offering of fund units of CIS is “something that everyone has been waiting for a long time”.
He explained that the CIS is a joint venture fund project that is broken down into smaller units for initial public offering for the purpose of raising money from sales to develop a project belonging to the company (a joint venture company) which is already registered with the SERC.
“This is a new mechanism that would create a new market [fund project market] as it is a source that can provide capital for the implementation of any project that has potential and can be profitable for those who buy these fund units,” he said.
The fund units of CIS are divided into several categories, including private funds, public funds and funds for implementing projects related to the real estate sector.
There would be a number of projects that may be continuously listed on the Cambodia Securities Exchange (CSX) for further trading, Socheat said.
CSX Market Operations Department director Kim Sophanita said the CIS project is a new product, seen as an additional option for CSX investors.
“The new product would be unique, in that it helps those who have money left but do not have the time and skills in any type of business to fund managers to continue investing in their skills,” she said.
Meanwhile, during an August 31 meeting, SERC’s Socheat said over the past decade, the securities sector in Cambodia has grown significantly, in which the securities products have been developed gradually and continuously.
To date, 20 companies are listed on the CSX, 11 of which have issued equity securities.
Nine companies are listed on the Main Board, which is a market for large enterprises, while two companies are on the Growth Board for small and medium enterprises. Nine other companies have issued corporate bonds.
Among the listed entities is Golden Tree Co Ltd, which issued the first green bonds in Cambodia, in line with the ASEAN Green Bond Standard.
The 20 companies have raised $328 million capital from the market, which has a total market capitalisation of $3.1 billion or 10.6 per cent of gross domestic product, as of August 30.