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Garment IPO to pay for factory

Workers at Grand Twins International garment factory sew material in Phnom Penh’s Dangkor district
Workers at Grand Twins International garment factory sew material in Phnom Penh’s Dangkor district. Vireak Mai

Garment IPO to pay for factory

Taiwanese garment factory Grand Twins International (GTI) has carefully laid out a schedule so it can go public on Cambodia’s stock exchange after the dust settles from unrest tied to minimum wage disputes, according to the company’s chief financial controller, Henry Chen.

GTI received approval from the Securities and Exchange Commission of Cambodia (SECC) on Wednesday to list with an initial offering of eight million shares priced between $1.85 and $3.50, Chen confirmed with the Post during an interview at the SECC yesterday. The offering will help fund the construction of a new factory.

Upon its official listing on the CSX, which the company is planning for mid-year, GTI would become only the second stock traded on the bourse since the Phnom Penh Water Supply Authority went public to great fanfare in April 2012.

Marketing material obtained by the Post shows that GTI – Cambodia’s second-largest garment manufacturer – employed some 5,700 workers in 2012, with nearly 90 per cent of clothing produced sourced by sport-retail giant Adidas. Fellow Taiwanese garment manufacturer TY Fashion is also reportedly eyeing an IPO in the coming months.

GTI’s announcement that it will go public comes three weeks after demonstrations over minimum wages in the garment sector came to a head with military police opening fire on a raucous demonstration outside Canadia Industrial Park in Phnom Penh, killing at least four protesters.

Despite the deadly protests, Chen said he was confident that the worst of the turbulent period since the strike was announced on December 24 had passed. Considering gross domestic product growth estimates for 2014 and Cambodia’s lenient tax system, Chen said it was the right time to announce the offering.

“There will certainly be concerns and worries from investors about Cambodia’s garment sector, but from our perspective, our production was only affected some 0.5 per cent during the strikes, and we closed for just three days total. So productivity remained strong with our buyers,” Chen said.

Factories are up and running again after the fatal shootings and government crackdown quelled the labour action, but the central sticking point of raising the minimum wage to $160 remains unresolved.

GTI first announced plans to list on the CSX in 2011, but negotiations with the SECC over an opening price stalled the garment manufacturer.

Excitement picked up again months later with an anticipated listing ahead of last year’s July election, but the “administrative and compliance matter” cited as the final hurdle at the time was apparently not cleared.

The company will target institutional investors rather than individuals in a bid to achieve rapid liquidity and fund a new, $10 million production facility further from the Phnom Penh city border over the next 12 months, according to the financial controller.

Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia, welcomed GTI’s announcement and backed the suggestion that transparency in the garment sector would only bolster the industry’s minimum wage stance.

“Disclosure and a public record of companies’ profitability are good. Then, people will be able to make up their own minds about whether, as the trade unions have claimed, garment manufacturers are making large profits, or that we are in fact making peanuts,” he said.

Jill Tucker, chief technical adviser at the International Labour Organisation’s Better Factories Cambodia, said financial, production and operating standards disclosure among Cambodia’s garment manufacturers is improving.

“We are seeing more transparency from garment factories and it [will] be beneficial across the board,” she said.


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