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Port operator’s IPO share price set near high tide mark

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A truck prepares to receive shipping containers at the Sihanoukville Autonomous Port on the Kingdom’s coast. Heng Chivoan

Port operator’s IPO share price set near high tide mark

Sihanoukville Autonomous Port (SAP), the state enterprise that operates Cambodia’s principal seaport, announced a share price of 5,040 riel ($1.26) yesterday for its upcoming initial public offering following a bookbuilding exercise that garnered a strong response from institutional investors.

SAP priced its shares at the top end of the 3,520 riel to 5,180 riel ($0.88 to $1.29) range that it offered to investors participating in a six-day bookbuilding late last month. The pricing puts the port operator on track to raise $27 million for expansion in what stands to be the Kingdom’s largest-ever IPO.

SAP, which operates the country’s only deepsea port in Sihanoukville, is offering investors 21.4 million shares, about a 25 percent stake in the company, ahead of its listing on the Cambodian Securities Exchange (CSX) later this month.

Eiichiro So, chairman of SBI Royal Securities, the sole underwriter, book-runner and lead manager of the IPO, said the offering attracted large investors and was oversubscribed.

“The total bidding shares are 2.4 times higher than the total reserved shares for bookbuilding,” he said. “We believe this bookbuilding has been a success and shows the high expectations of investors.”

The share price gives Sihanoukville’s seaport operator an implied market capitalisation of $108 million, about four times the size of Phnom Penh’s river port operator, which raised $5.2 million in an IPO in late 2015.

SAP has said it will use the proceeds of the share offering to purchase an additional 52 hectares of land for construction of a new dry port and to expand the existing container yard. It will also put capital towards the purchase of heavy machinery and repayment of a $74 million soft loan from Japan International Cooperation Agency (JICA).

In December, SAP unveiled a massive $300 million master plan for expansion to be completed by 2022 that would increase its draft and triple its current container capacity.

JICA, which has been instrumental in the port’s development and financing, is set to become a strategic investor, taking 54 percent of the 21.4 million shares in the offering, according to disclosure documents.

Just over 25 percent of the shares were allocated to bookbuild investors, while 10.8 percent will be available to retail investors when public subscription opens on May 17.

The remaining 10 percent of the public shares will be allocated to SAP’s employee stock ownership program, giving its staff 2.5 percent ownership of the company.

More than 70 investors successfully bid in the bookbuilding, with two investors taking more than 1.5 million shares each. While So could not disclose details on the identities of these investors, he confirmed a strong showing from local investors.

“At this moment, we can say [the ratio of] successful investors from Cambodia is 66 percent and foreign investors is 34 percent,” he said.

SAP revenue increased to $51 million last year while net profit dipped to $7.8 million from $9.4 million a year earlier. The port saw a marked slowdown in container traffic growth last year, handling about 400,000 TEU, or standard twenty-equivalent units.

However, So remained confident that the last year’s lower than expected results would do little to dampen investor confidence.

“One of the [concerns] is capacity of container handling, and we expect they should solve this matter with the new cranes introduced early this year and the new investment via this IPO funding,” he said.

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