An undisclosed construction-related company that wishes to list on the Cambodia Securities Exchange’s (CSX) secondary Growth Board and raise money to expand its operations is forging ahead with internal IPO (initial public offering) compliance work, with assistance from a “technical team” from the local bourse.
CSX CEO Hong Sok Hour confirmed this to The Post on July 24, but declined to provide additional details.
However, in an early-May interview, he disclosed that the local stock exchange was working with four SMEs from the construction and tech-related domains on listing requirements. “We’ve been working with them, explaining some of the listing processes and what they should do to prepare … one of the four – from the construction sector – will be ready before year’s end.
“They’ve prepared well for the listing, in terms of corporate governance and internal procurement. They’ll be listing on the Growth Board,” he confirmed, adding that the three other companies will require additional time to get ready.
“I encourage local SMEs to pursue financing by listing on the market, everyone well understands that many businesses have been facing financial difficulties in light of the Covid-19 pandemic.
“The addition of more companies to the bourse – those seeking funds for business expansions or sustainability – will highlight the capital market as a key source of funds,” Sok Hour said.
The Growth Board, a secondary platform targeted for SMEs (small- and medium-sized enterprises), was launched in late 2015 to remove certain listing hurdles and better serve companies with significant growth potential but limited access to capital or financial resources. However, it has failed to draw issuers over the years, despite the Main Board’s continued expansion.
The Securities and Exchange Regulator of Cambodia (SERC) requires firms to have shareholders’ equity of at least $500,000 to list on the Growth Board, as opposed to $7.5 million on the primary board.
Companies that list on the Growth Board are also required to release one year of audited financial results, compared to the two years needed for the Main Board. Additionally, the results must show a positive net profit or positive operating cash flow with gross profit margin of at least 10 per cent.
In March, the SERC, UN Economic and Social Commission for Asia and the Pacific (ESCAP) and South Korea’s Global Green Growth Institute (GGGI) launched the Cambodia Sustainable Bond Accelerator programme, in collaboration with Asian Development Bank (ADB) trust fund Credit Guarantee and Investment Facility (CGIF) and Mauritius-based GuarantCo Ltd, part of the London-headquartered Private Infrastructure Development Group (PIDG), according to ESCAP.
In a June 26 statement, ESCAP noted that three local firms have been chosen to receive assistance from the support programme to pursue their goals of raising a total of roughly $95 million through the sale of green or sustainability bonds.
“The sustainable bond size of three potential issuers collectively is around $95 million, which is close to 50 per cent of the current plain bond listed in Cambodia,” GGGI director-general Frank Rijsberman was quoted as saying in the statement.
Two of the companies are microfinance deposit-taking institution (MDI) Amret Plc and public-listed industrial park operator Royal Group Phnom Penh SEZ (PPSP), which aim to issue $50 million and $20 million sustainability bonds, respectively.
Real estate firm Golden Tree Co Ltd (GT), meanwhile, is looking to offer its second green bond, to the tune of $25 million “for green building development”, the statement said.
GT on January 19 listed the Kingdom’s first green bond, raising 6.0721 billion riel ($1.46 million) to expand its business, in what has been hailed as a milestone in the CSX’s development.
Without elaborating further, the statement concluded: “By the end of 2023, ESCAP and its partners look forward to supporting three new green and sustainable bond listings in Cambodia.”
According to the CSX’s Sok Hour, as of June 27, 10 stocks have been listed on the local bourse – eight on the Main Board and two on the secondary Growth Board – raising a combined “$124 million”. Additionally, “$323.5 million” worth of corporate bonds have been issued on the CSX.