Cambodian stockbrokers yesterday admitted to a disappointing level of investor interest in Grand Twins International’s (GTI) initial public offering.
Garment industry unrest, distrust in the private sector and a lack of liquidity in the market were all said to be discouraging investors from buying into the Taiwanese firm’s eight-million-share offering.
Sorn Sokna, CEO of Sonatra Securities, one of the brokers assigned to the IPO, said that so far just four clients had registered their interest with Sonatra in the GTI listing, which is slated to officially take place on May 29.
“Not many people are interested in the IPO, both local and foreign,” Sokna told the Post yesterday.
“We cannot say exactly why,” he added. “[But] I get information from other companies also that they have not received much interest.”
GTI has so far failed to match the hype that surrounded the Phnom Penh Water Supply Authority’s (PPWSA) listing in 2012, Sokna said.
State-owned PPWSA remains the only company listed on the Cambodia Stock Exchange (CSX). Upon going public, GTI will become the second firm to list on the local bourse, and the first private firm to do so.
Svay Hay, CEO of Acleda Securities, which is also a registered broker for GTI, said the new offering had proved to be less attractive to investors than PPWSA’s.
“That said, the investors interested have committed to large amounts and GTI’s listing is a good sign for the CSX,” he said.
Borin Phan, operations manager at SBI Royal Securities, part owned by the conglomerate Royal Group, mirrored the concerns of Hay.
“PPWSA was more trusted because it is a public company,” Phan said.
“This time it is a private company and a garment firm, and with the political situation and the strikes earlier this year – most of the locals feel scared of fluctuations in the garment industry.
” Phan added that since the political turbulence began in mid-2013 with the national election and the subsequent political standoff, as well as the January garment sector strikes, trading in the CSX had decreased notably.
“There needs to be stabilization in the garment sector to support the GTI IPO,” he said.
Douglas Clayton, CEO of Leopard Capital, an investment firm in Phnom Penh, cast doubt over the timing of the listing.
“With uncertainty over future wage increases, this isn’t a great time for a garment factory to go public here,” Clayton said yesterday in an email.
“Hopefully, the CSX can attract some banks, telecoms, and hotel groups to list their shares,” he said.
GTI spokesman Stanley Shen was quick to allay concerns. Shen said the garment manufacturer, which employs 5,600 people at its factory in Por Sen Chey district and makes apparel for sporting goods giants Adidas and Reebok, was not affected by the recent wage disputes.
“GTI never had any strike record and our average salary is well above the minimum wage and most of our workers are satisfied with this,“ Shen said.
Shen said, however, that GTI could have done more to promote the listing to encourage greater investment.
A spokesman for Phnom Penh Securities, the underwriting firm overseeing the new IPO, downplayed the lack of interest in GTI, saying the initial book-building process had in fact attracted significant interest from overseas institutional investors from Taiwan, China and Japan.
“In Taiwan and China recently, the stocks of listed garment companies have increased remarkably,” the spokesman, who declined to be named, said, adding that GTI’s listing price is expected to be between $2.40 to $2.50 per share.
“We strongly believe that the subscription and listing of GTI is very successful,” the PPS spokesman said, adding that GTI’s 2013 earnings of $33 million was proof the garment maker was in good shape to go public.
The spokesman did concede, however, that there was nervousness in the market due to a lack of liquidity that will hamstring share sales after listing.
PPS on April 11 announced the GTI listing date had been pushed back by three weeks as it awaited approval from the Securities and Exchange Commission of Cambodia (SECC) on its final book-building results, which will outline the listing price.
Investors will now be advised of the results on April 24. Following that, subscriptions will be opened to the public from May 2 to May 9. The final listing date is now set for May 29, three weeks after the original target of May 8.
Chhun Sambath, director of the security insurance supervision department at the SECC, said the regulator will be considering GTI’s book-building documents at the next board meeting on April 23: “Nothing is actually delayed.
They submitted their book building documents and terms and conditions to us on April 8, then it was Khmer New Year. This process is not just easy and quick to approve,” he said.
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