As expected, the book-building phase for Phnom Penh Water Supply Authority’s initial public offering was significantly oversubscribed, the estimate being 17 times.

Interested investors had the opportunity to bid at a price  no lower than 4,050 riel a share, and at a maximum of 6,350 riel a share when submitting their book-building form with either sole underwriter Tong Yang Securities (Cambodia) or the selling agent, ACLEDA Securities.

Tong Yang has announced an offering price at 6,300 riel, just shy of the maximum bidding price.

Investors who subscribed during the book-building can determine if they were allocated shares to purchase by reviewing the list of successful and unsuccessful investors published by PPWSA, which can be viewed on PPWSA’s and ACELDA’s websites.  

Admittedly, the consensus is that the process to date has been far from easy, could have been communicated more clearly, and that investors' physical presence was required for payment.

In the end, it appears that 514 investors were successful, the largest single allocation being 474,143 shares, and 337 investors were not.

Although the interested players are complimenting the scale of market participation, 851 investor applications comprise a minuscule group.

This could be a reflection of both the unwillingness of foreign investors to navigate through the arduous book-building process and the evident lack of understanding of equity ownership that still persists among the Khmer public.

Thankfully, the PPWSA IPO was relatively small at US$20.4 million, compared with the global average deal size of about $200 million. In China, it’s about $260 million and in the US about $325 million.

Quite simply, the process will need to be greatly modified to garner larger international investor participation, especially for large, less lucrative IPOs.

It's not widely understood in the market how the shares were allocated.

Foreign investors appeared to have received approximately 5.8 per cent of the amount of shares in which they bid, while Cambodian investors received approximately 11.6 per cent.

Given the estimate of 17 times over-subscribed, the math works for the foreign investor allocation.

Successful bidders can now decide whether they're willing to pay the price of 6,300 riel and either opt to purchase the original amount for which they bid, take up the original amount and subscribe for additional shares, or subscribe for fewer (or no) shares, provided the offer remains over-subscribed.

Only 70 per cent of the intended floated shares were offered for the book-building phase. The remaining 30 per cent are now available in the subscription phase.

Unsuccessful investors and those who did not participate in the book-building phase can apply during the subscription phase. Investors may use their remaining deposit to bid on shares in the subscription process.

The subscription period is from March 29 to April 4. If investors wanted to get a head start on the subscription form, they were out of luck, as it's not yet available.

It is also a requirement for subscribing investors to have an investor ID from the Securities and Exchange Commission of Cambodia and a broker account at a licensed securities firm.

The market take is that the SECC is a bit behind on assigning investor ID numbers, which may cause further investor frustration and additional work for securities firms assisting their customers.

Anthony Galliano is the chief executive of Cambodian Investment Management.  

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