Thailand Capital Markets Deal

IFR Asia Awards 2017
3 min read
S Anuradha

TOA Paint’s strong domestic position and expectations of growth in South-East Asia turned its Bt12bn (US$372m) Stock Exchange of Thailand IPO into a blockbuster in September despite a weak local market.

The rare consumer sector listing – the biggest from the construction materials sector in more than 20 years – offered investors some welcome diversity after a run of power and infrastructure floats.

TOA’s operations across South-East Asia also allowed it to tap into appetite for a broader regional play at a time when intra-Asian trade volumes are growing, and the deal sold well with Asian investors, in Thailand and beyond.

The IPO launch came towards the end of the year-long national mourning period following the death of the Thai king Bhumibol Adulyadej in October 2016. The long mourning period had depressed economic activity and muted demand for consumer goods, but investors took the view that the Thai economy was poised for a recovery once consumers started spending. TOA also boasted a strong fundamental story with a 48.7% share of Thailand’s decorative paint market and a 13% share across the growing South-East Asian market.

The 175m-share cornerstone tranche, covering just over one third of the deal, attracted some impressive names. Foreign investors Hillhouse Capital and Aberdeen Asset Management committed to 20% of the deal between them, with Kasikorn Asset Management, Bualuang Asset Management, AIA (Thailand) and SCB Asset Management also on board.

Hillhouse, Kasikorn and SCB were participating as cornerstone investors for the first time in a Thai IPO.

Books were covered within two hours of launch and demand continued to grow. The paint manufacturer marketed 507.6m shares, equal to a 25% stake, post-IPO. Of these, existing shareholder Wybrant Holding, wholly owned by the Tangkaravakoon family, sold 253.6m shares while 254m were primary shares.

In addition to the cornerstone tranche, institutional investors bought 175m shares and retail buyers 157.6m. About 65% of the institutional tranche went to foreign investors.

Overall, Asian investors bought 59% of the total IPO, European and US-based investors 3% each while domestic investors took 35%.

On the back of the strong response, TOA priced at the top of the Bt22–Bt24 price range for a 2018 P/E multiple of 21.06, a 25% premium to the global paint sector’s median valuation of 16.9. It also translated into a 26% premium to the median 2018 P/E multiple for Thai consumer stocks.

TOA Paint’s shares have traded well since listing on October 10, soaring to a high of Bt37.50 on November 1. It closed the review period at Bt33.25, 39% above its IPO price, while the SET Index fell 0.1% over the same period.

Bualuang Securities, Kasikorn Securities and UBS were the joint global coordinators.

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