The state enterprise that operates Cambodia’s second-largest port is looking to raise up to $6.4 million in its initial public offering (IPO) and float 20 per cent of its shares on the stock market in December, according to a company draft prospectus released yesterday.
Phnom Penh Autonomous Port (PPAP) will issue a total of 4.1 million shares at a price to be fixed following a three-day book-building session scheduled to begin on October 19. Some 1.7 million shares, about 40 per cent of the issue, will be offered to institutional investors participating in the book build.
Yuanta Securities, the underwriter for the IPO, has set the price band from 4,405 riel to 6,320 riel (approximately $1.08 to $1.55) per share. With that, PPAP expects the proceeds from the share offering to be between $4.4 million and $6.4 million, before deducting listing and accounting expenses.
Upon completion of the book building, PPAP and its underwriter will set the price at which shares will be sold to investors, and determine the allocation. The subscription period will run from November 12 to 17 ahead of the listing on the Cambodia Securities Exchange (CSX), scheduled for December 11, according to the prospectus.
Stephen Higgins, managing partner of investment firm Mekong Strategic Partners, said PPAP’s short book-build period should not have any significant impact on the share’s valuation.
“The short book-build period should be sufficient to determine the IPO price, and seems a sensible way of going about it,” he said. “Yuanta and other brokers have already been out marketing the IPO, so increasing the book-build period wouldn’t necessarily result in many more investors coming in.”
He said the stock should also appeal to retail investors, as it is supported by the PPAP’s revenue potential and significant land holdings. Moreover, the company is sweetening its IPO by offering investors a government-guaranteed 5 per cent dividend yield on the initial share price.
The share issue will represent a free float of 20 per cent of PPAP’s total issued shares, with 10 per cent of this float reserved for the company’s employee stock ownership plan.