Train operator Royal Railway Plc, a subsidiary of local conglomerate Royal Group of Companies Ltd, on October 31 became the eighth firm to list a corporate bond on the Cambodia Securities Exchange (CSX) to raise 41 billion riel, or about $10 million, to expand their operations.
A total of 410,000 units were issued at par value of 100,000 riel, carrying a per-annum coupon rate of seven per cent paid annually and a 10-year tenor with maturity date of October 10, 2032, according to the CSX website, which noted that the bond was underwritten by SBI Royal Securities Plc.
Speaking at the listing ceremony, Royal Group chairman Kith Meng confirmed that a second, $20 million bond is planned for later this year, as “part of my commitment and ongoing investment into the railway”, “to give the country and its people a reliable safe and economic service” and “assist in the economic growth” of the country.
In 2007, rail operations in Cambodia ceased for a rehabilitation project. Then on June 12, 2009, the Cambodian government granted a 30-year concession agreement to Toll (Cambodia) Co Ltd – a joint venture between Australian-owned Toll Holding Ltd and Royal Group – to manage operations of the Kingdom’s railway system.
Meng revealed that since operations restarted in 2010, “I have invested over $100 million” in the railway. “This bond will be used to upgrade the railway line and wagons and locomotives plus new equipment that will further modernise the railway.
“Soon we will receive 130 wagons and another four locomotives,” he said, noting that this order includes 210 wagons to be delivered at a later date.
Of note, Toll Holding in 2014 transferred its 55 per cent stake in Toll Cambodia to Royal Group, which then changed the venture’s name to Royal Railway Cambodia.
Meng shared that rail freight volume increased 34 per cent from 2017 to 2021, and that passenger and freight trains run seven days a week on the Phnom Penh-Poipet and Phnom Penh-Sihanoukville lines. Additionally, Royal Railway operates container, fuel, cement and rock freight trains seven days a week to Sihanoukville and Battambang, he said.
CSX CEO Hong Sok Hour lauded the local bourse as a: solid financing alternative for enterprises that need additional capital to expand their business potential, a source of passive income for investors, and a key promotion vehicle for investment in Cambodia.
Ministry of Economy and Finance secretary of state and CSX chairman Hean Sahib, who presided over the ceremony, commented that Royal Railway’s exclusive rights to operate Cambodia’s railways has been a contributory factor in the development of the network, which he said is in line with government policy to promote and develop the Kingdom’s transportation and logistics systems.
“Today’s achievements will be a model for other enterprises that are willing but reluctant to enter the securities market, instilling them with the confidence to seize the opportunity and raise funds from the stock market to strengthen and expand their businesses,” he said.
At present, a total of 17 companies feature on the CSX – seven companies have issued shares on the Main Board and two on the Growth Board – and eight corporations have listed their bonds.
With trading launched on April 18, 2012, the CSX is co-owned by the finance ministry and Korea Exchange (KRX) on a 55:45 ratio.