Moderate interest in Cambodia’s second-ever IPO

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Cambodia_stock_exchangeTepid interest in a Taiwanese-owned garment manufacturer’s planned initial public offering (IPO) in Cambodia means that the deal could be priced below the midpoint of an indicative range, a person with direct knowledge of the offering said on March 27, the Wall Street Journal reported.

Grand Twins International (Cambodia) PLC had planned to sell 8 million shares, or 20 per cent of the company, for between $1.85 and $3.50 apiece in its up to $28 million IPO, which would become only Cambodia’s second-ever stock listing if it goes through. It would be the second company ever being listed at the Phnom Penh Stock Exchange besides the Phnom Penh Water Supply Authority.

The planned listing date of Grand Twins is in early May.

Due to concerns over the prospects of Cambodia’s garment industry, which is plagued by labour unrest and rising costs, “the demand for this IPO is lower than what we saw for the Phnom Penh Water Supply Authority offering,” the person said, referring to the April 2012 listing of the company.

The moderate demand may damp hopes that a successful Grand Twins IPO could help revive Cambodia’s lackluster stock market, which has seen trading volumes decline dramatically since its debut two years ago. Even so, underwriters and selling agents are hopeful that demand for the Grand Twins offering could pick up on the final day of order-taking, said another person with knowledge of the book-building process that started on March 17.

“There has been greater demand from foreign investors compared to locals,” this person said. “Some investors have taken a wait-and-see approach, but interest has improved in recent days.”

Other IPO candidates have either struggled to meet regulatory requirements or decided to hold off until the market gains depth and liquidity.

Grand Twins, whose primary customer is German sportswear firm Adidas AG, made $54.9 million in revenue in 2012 mainly by exporting to apparel retailers in Europe and the US. In its prospectus, the company said it would use the IPO proceeds to add two new production lines, grow its head count to 6,000 from about 5,600 currently, fund its working capital needs and repay bank loans.

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Reading Time: 2 minutes

Tepid interest in a Taiwanese-owned garment manufacturer’s planned initial public offering (IPO) in Cambodia means that the deal could be priced below the midpoint of an indicative range, a person with direct knowledge of the offering said on March 27, the Wall Street Journal reported.

Reading Time: 2 minutes

Cambodia_stock_exchangeTepid interest in a Taiwanese-owned garment manufacturer’s planned initial public offering (IPO) in Cambodia means that the deal could be priced below the midpoint of an indicative range, a person with direct knowledge of the offering said on March 27, the Wall Street Journal reported.

Grand Twins International (Cambodia) PLC had planned to sell 8 million shares, or 20 per cent of the company, for between $1.85 and $3.50 apiece in its up to $28 million IPO, which would become only Cambodia’s second-ever stock listing if it goes through. It would be the second company ever being listed at the Phnom Penh Stock Exchange besides the Phnom Penh Water Supply Authority.

The planned listing date of Grand Twins is in early May.

Due to concerns over the prospects of Cambodia’s garment industry, which is plagued by labour unrest and rising costs, “the demand for this IPO is lower than what we saw for the Phnom Penh Water Supply Authority offering,” the person said, referring to the April 2012 listing of the company.

The moderate demand may damp hopes that a successful Grand Twins IPO could help revive Cambodia’s lackluster stock market, which has seen trading volumes decline dramatically since its debut two years ago. Even so, underwriters and selling agents are hopeful that demand for the Grand Twins offering could pick up on the final day of order-taking, said another person with knowledge of the book-building process that started on March 17.

“There has been greater demand from foreign investors compared to locals,” this person said. “Some investors have taken a wait-and-see approach, but interest has improved in recent days.”

Other IPO candidates have either struggled to meet regulatory requirements or decided to hold off until the market gains depth and liquidity.

Grand Twins, whose primary customer is German sportswear firm Adidas AG, made $54.9 million in revenue in 2012 mainly by exporting to apparel retailers in Europe and the US. In its prospectus, the company said it would use the IPO proceeds to add two new production lines, grow its head count to 6,000 from about 5,600 currently, fund its working capital needs and repay bank loans.

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