Port IPO opens to subscribers

Content image - Phnom Penh Post
An overview shot of stacked containers at the Sihanoukville Autonomous Port in Preah Sihanouk province. Heng Chivoan

Subscription for the initial public offering of Sihanoukville Autonomous Port (SAP) opened yesterday, with its underwriter predicting a strong investor response following an oversubscribed bookbuilding exercise late last month.

SAP, which operates the nation’s busiest seaport on 150 hectares in Sihanoukville, is offering investors 21.4 million newly issued shares, or about 25 percent of its enlarged shareholding. With shares priced at 5,040 riel ($1.26), the company stands to raise $27 million for equipment and expansion in what could be the largest IPO in Cambodian history.

Seng Chan Thoeun, head of corporate finance at SBI Royal Securities, the IPO’s underwriter, said a strong showing by institutional investors during last month’s bookbuilding exercise has raised expectations for its retail subscription.

“Demand is very high for this IPO, though it is driven mainly by local institutional investors,” he said.

According to Thoeun, a six-day bookbuild that offered 5.4 million shares, or about a quarter of the newly issued shares, to investors was 2.4 times oversubscribed. About two-thirds of the investors that participated in the bookbuild were Cambodian.

“We have two major Cambodian investors, who are institutional investors, and we have a few foreign investors, though their subscriptions are not that high.”

Japan International Cooperation Agency (JICA), which is financing projects to expand the port’s infrastructure, separately agreed to purchase more than half of the newly issued public shares.

Investors who were unable to secure shares during the bookbuild have a chance to subscribe during the May 17 to 22 subscription period, with an additional 2.3 million shares on offer. Share allotments will be announced on May 25 ahead of the stock’s listing on the Cambodia Securities Exchange (CSX) on May 31.

Thouen said his confidence in the IPO was based on the SAP’s potential for growth as Cambodia’s principal seaport. But just to sweeten the deal SAP has offered private investors a guaranteed 5 percent dividend yield on the initial share price for the next three years.

He said a guaranteed dividend – model which proved popular with investors when the capital’s port operator launched its IPO in late 2015 – would help assuage concerns over the stock’s future performance and liquidity on the CSX, which has just four listed companies.

“This is not the solution [to illiquidity], but it is the right solution for Cambodia at least at this early stage of development,” he said.