Thailand Capital Markets Deal

IFR Asia Awards 2016
3 min read
Asia
S Anuradha

Thailand’s largest IPO of the year arrived at a wrenching time for Thai investors, priced on the same day the country’s revered king passed away after a 70-year reign.

Banpu Power weathered a heavy market sell-off in the days prior to the king’s death, successfully engaging global funds and convincing local investors to look beyond short-term uncertainty.

The company raised Bt13.6bn (US$382m) by selling 648.4m shares at the top of the Bt18–Bt21 range. Outside of infrastructure trusts and REITs, this was Thailand’s largest float since Bangkok Airways raised Bt16.9bn in 2014.

A fair amount of education was required particularly to attract foreign fund managers, who had stayed away from the Thai equity markets in the previous months.

Thailand’s equity market was very quiet in 2016, with just seven mainboard IPOs during the first 10 months of the year. Banpu’s was comfortably the biggest, accounting for almost 50% of the total raised.

Given the general market uncertainty, bankers earmarked a large chunk of shares to anchor and cornerstone investors.

By investor types, the biggest portion of the deal, 30% of the IPO or 195m shares, was sold to existing shareholders of the parent company. The international institutional tranche comprised 178m shares, of which cornerstone investors Credit Suisse Private Bank and Capital Research took up a combined 110m. The former was coming as a cornerstone investor for the first time in a Thai IPO. Domestic institutions were offered 134m shares and domestic retail buyers 141m.

The defensive nature of the business, its growth prospects and a 4.6% dividend yield all worked in the company’s favour. The books were covered on the second day of marketing, giving the issuer the confidence to close the book one day ahead of schedule on October 13.

Reports from the palace on October 10 that King Bhumibol Adulyadej was in an “unstable” condition triggered a three-day losing streak that knocked Bangkok stocks down 6.5%.

The announcement of the king’s death came after markets closed on October 13. However, Banpu’s retail tranche ran as scheduled from October 18 to October 20.

The institutional tranche was increased to 48.1% of the total offer from 43.7% originally planned given the strong demand. Foreign investors were allocated 34% of the total institutional tranche, higher than the average 20%–30% participation in Thai IPOs in recent years.

The shares had a stellar debut, rising 30% to Bt27.25 on October 28.

Bualuang, Credit Suisse, CIMB, Kasikorn, Quant and Thanachart were the bookrunners.

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