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SME gets in-principle nod for IPO

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The CSX could soon see a first listing on its Growth Board, which was launched in 2015 for companies with less access to capital or financial resources. Hean Rangsey

SME gets in-principle nod for IPO

The Cambodia Securities Exchange (CSX) approved in principle the listing eligibility of a privately-owned small and medium-sized enterprise (SME) on its Growth Board, CSX vice-chairman Ha Jong-weon told The Post on March 22.

This could lead to the first initial public offering (IPO) on the CSX’s second platform, which was launched in late 2015 to lift some of the barriers for listing and cater more to companies with less access to capital or financial resources.

“Currently, we have just given [in-] principle approval on [the] listing eligibility review to one SME and will [make the announcement in a] press release shortly,” Ha said, declining to name the company or provide further details.

“I think it is too early to disclose when they are going [to] list and how much they are going to raise [from the IPO]. I think that this SME will pave the way or will be a good model for other SME[s] considering [raising] fund[s] for business expansion[s] via IPO[s],” he added.

Securities and Exchange Regulator of Cambodia (SERC) director-general Sou Socheat confirmed to The Post that the company is going ahead with listing requirements, but also declined to comment further.

The CSX has struggled to attract a single SME since the launch of its Growth Board. According to SERC regulations, companies are required to have a minimum of $500,000 in operating capital to list, compared to $7.5 million on the Main Board.

Companies that list on the platform are also required to release one year of audited financial results, compared to the two years required for bigger companies.

Additionally, the results must show a positive net profit or positive operating cash flow with gross profit margin of at least 10 per cent.

According to Ha, SMEs that list soon will enjoy a number of tax breaks, including a reduction in income tax, a suspension on monthly prepayment tax and the elimination of all tax debt.

He was listing some of the tax incentives to be provided over a three-year period as outlined in a sub-decree issued by Prime Minister Hun Sen on January 4, 2019.

Ha added that other SMEs – in the construction, engineering and real estate sectors – had set up IPO teams and were in the preparation process, most notably working with accounting firms that provide auditing services.

At present, there are 13 listed companies on the bourse – seven stock-listed and six corporate bond-listed. As of September 30, the 13 companies have raised a combined $253 million, the latest figures published by CSX show.

The stock index increased more than 57 per cent in 2019 compared to the previous year, only to recede 14.93 per cent in 2020.

Last year, two companies listed stocks and three listed bonds. The five firms raised a combined $92 million in January-September.

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