The environment has become far more conducive for firms to raise funds as prospects for the economy are brightening, with growth for next year tipped at 5.5%, and the benchmark stock index trading at a 14-month high after jumping 10% since the coup.
“The more stable political situation is generally good news for companies and investors,” said Prasert Patradhilok, president of Advisory Plus, an investment adviser. “The IPO window is opening and the momentum should continue, until the election risk late next year.”
The Thai army has promised a general election come late 2015.
Bangkok Airways and Bangkok Land are among the approved IPOs waiting for listing dates in the coming months. As of June, there were 13 companies and four property funds granted such approvals and now negotiating with the Thai stock exchange over listing dates.
A further 28 companies, four property funds, one infrastructure fund and three REITs are in the bulging IPO pipeline awaiting filing approvals.
Thai investors will buy most of the small deals, but the bigger ones, such as Bangkok Airways and Impact Growth Real Estate Investment Trust, each seen valued at Bt20bn–Bt30bn (US$623m–$935m), will be marketed globally, providing a test of how foreigners view post-coup Thailand as a place to invest.
Many of these IPOs will hit the market this year and, though a stretch, the Stock Exchange of Thailand thinks it may even break its Bt210bn IPO target for 2014.
Last year was the busiest in a decade, according to the SET, with 38 IPOs worth Bt192bn booked, but this year could turn out better, which would be a remarkable feat in view of the political turbulence.
The Thai stock market was South-East Asia’s worst performer in 2013, suffering a 6.7% drop as Prime Minister Yingluck Shinawatra’s grip on power began slipping away.
There were just 11 IPOs worth Bt23bn in the five months before the May 22 coup, but 12 deals worth Bt34.3bn have been booked , since the army takeover, exchange data shows.
Investment bankers said valuations were fairly high versus historical levels, making it attractive for firms to list.
The benchmark SET index is trading at 13.86x 2-month forward P/E ratio, versus an average of 15.13x from 1997 to 2013, Thomson Reuters Datastream shows.
Infrastructure funds
Recent IPOs performed strongly. Shares in beverage-maker Sappe, for example, doubled on its June 25 debut and have risen a further 7.2% since.
Next off the block will be Exotic Food, which will list on Thailand’s Market for Alternative Investment bourse on Monday, August 25.
The ruling military council’s commitment approval of Bt2.4trn in infrastructure investment over the next eight years, has also excited investors.
Construction stocks have surged with shares in builders, such as Ch Karnchang and Italian Thai Development, up almost 50%.
Investors are preparing for infrastructure funds to start listing. Among large IPOs expected are telecoms group Jasmine International’s planned infrastructure fund for its broadband internet business. It could list with a valuation around Bt60bn–Bt70bn.
However, a listing is unlikely this year due to a legal dispute related to an underlying asset.
In addition to infrastructure funds, new Thai Securities and Exchange Commission regulations could pave the way for foreign companies to list on the main exchange as part of plans to make Bangkok an investment hub for the Greater Mekong sub-region.
Proposed regulations would allow foreign companies to make their first sale of stock to the public on the main Thai stock exchange and simultaneous dual listings locally, according to Vorapol Socatiyanurak, secretary-general of the SEC.
“Many foreign companies have an intent of listing here. We are working on foreign primary listing regulations and hoping to finish them in August or September,” he said.
