FRONT STORY ASIA-PACIFIC
Locals buy into Thailand Future
Infrastructure and yield instruments low on the shopping list for foreign investors
State-owned infrastructure trust THAILAND FUTURE
FUND completed the kingdom’s largest IPO in
three years thanks to support from local
institutions even as foreign investors stayed away.
TFF last week raised Bt45bn (US$1.4bn)
through its IPO, having priced it at the bottom
OFûAûnûRANGEû4HEûmOATûISûTHEûBIGGESTû
in Thailand since Jasmine Broadband’s Bt37bn
infrastructure fund listing in 2015.
Local investors made up most of the 50
accounts joining the institutional tranche,
while participation from foreign investors was
very limited and the entire allocation went to
locals only. The 15 cornerstone investors in
the IPO were also local institutions.
The trust owns toll roads including
Bangkok’s Chalong Rat Expressway and the
elevated Burapha Withi (Bang Na)
Expressway linking the capital to the
eastern economic corridor. TFF has to be
majority owned by local investors under
Thai government rules. Foreign investors,
who were also given a chance to join the
transaction, decided to pass.
The lack of interest of foreign investors
did not come as a surprise as concern over
rising interest rates in the US has made
them averse to yield-based instruments in
emerging markets. “Infrastructure, yield
instruments are low on their shopping list,”
an ECM banker away from the deal said.
This was in contrast to the Bt15bn IPO of
energy drinks maker Osotspa earlier this
month, where foreign investors were the
main buyers in the institutional tranche.
“The consumer sector continues to grow
in Thailand but the same can’t be said of
infrastructure, which has seen many delays
in recent years,” the banker noted.
However, Osotspa’s weak listing may have
put off foreign investors. The shares traded
at Bt24.20 last Friday against the IPO price of
Bt25, having lost most of the gains made
shortly after listing on October 17.
“Although the intensity of sales has
declined, the TFF IPO didn’t have much to
offer by way of yield or growth,” a local
analyst said.BIG FLOATS
While foreigners shunned TFF, they are
looking forward to some large IPOs next
year as Thailand remains a more promising
market than others in South-East Asia.“Thailand is now being considered a safe
haven of sorts in Asia. It’s one of the few
Asian economies with a current account
surplus and while elections are due early
next year, we have been witnessing a decent
phase of political stability,” the analyst said.
The country has been ruled by a military
junta since a coup in May 2014.
PTT OIL AND RETAIL, a subsidiary of Thailand’s
largest energy company PTT, plans to raise
about US$2bn through an IPO next year.
TCC Group is currently in the process of
hiring banks for a US$1bn–$1.5bn IPO of its
local property unit ASSET WORLD CORPORATION
and also Central Group for its retail business
)0/ûOFûATûLEASTû53BNû"OTHûmOATSûAREû
expected next year.
A total of 4.5bn units were sold in the TFF
mOATû!FTERûTHEû)0/ ûRETAILûINVESTORSûWILLûOWNû
50% of the fund, Thai institutions 40% and
the Ministry of Finance 10%. The shares start
trading on October 31.
Bank of America Merrill Lynch, Finansa, JP
Morgan, KrungThai Bank and Phatra Securities
are the joint global coordinators on the TFF
IPO.
S AnuradhaMarket turmoil batters Yeti IPO
Expensive ice cooler raises less and trades down on debut
YETI, a sponsor-backed maker of premium
branded ice coolers and drinkware, ran into
chilly market conditions, forcing it to
downsize its NYSE IPO before stumbling on
debut Thursday.
Having already delayed its listing plans by
TWOûYEARS ûAû
lRMûUNDERWRITINGûSYNDICATEûLEDû
by Bank of America Merrill Lynch, Morgan Stanley
and Jefferies priced 16m Yeti shares or 19% of the
company at US$18 for proceeds of US$288m.
The price range was US$19-$21. Yeti sold
2.5m primary shares as planned (earmarked
for debt reduction), but selling shareholders,
including sponsor and major shareholder
Cortec, agreed to cut the secondary
component to 13.5m shares from 17.5m at
launch.
The Dow Jones Industrial Average fell
more than 600 points in one of its worst
sessions of the year on the day Yeti priced its
IPO, though a rebound in the following
session was not enough to avoid a
disappointing opening session.
On Thursday, the shares began trading at
US$16.75 before closing at US$17.00 for an
opening loss of 5.6%.
4HEûOFFERINGûWASûlVEûTIMESû
oversubsubscribed and drew a concentrated
book of demand, according to bankers. Some
consumer-focused funds steered clear of the
deal after suffering heavy portfolio losses in
October, another banker said.
“The valuation was fair but it was
unfortunate timing,” he said.
Pricing valued Yeti at 11 times 2019 EV/
Ebitda, a big discount to more than 20 times
for high-growth consumer brands such as
Lululemon and Canada Goose but also a
discount to more mature brands, including
shoe companies Nike and Adidas.The Austin-based company aborted an IPO
ATTEMPTûINûûTHEûDEALûWASûlLEDûBUTûNEVERû
launched) after excess inventory in its
wholesale distribution channels led to a 22%
decline in 2017 sales to US$639.2m.
Founded by avid outdoorsmen Roy and
Ryan Seiders in 2006, Yeti reported adjusted
Ebitda of US$58.4m on sales of US$341.5m
UPû ûINûTHEûlRSTûHALFûOFû
5NDERûTHEûlNALûTERMS û#ORTECûSOLDûMû
shares (of the 13.5m secondary component)
to cut its stake to 54.6% from 69.4%.
Despite Yeti’s IPO struggles, Cortec is still
thought to have made as much as 20 times
its initial investment in 2012 based on the
current valuation.
The other partial sellers in the offering
included the founders, though they jointly
retain a roughly 20% stake in the company.
Though Yeti emerges from the IPO with
nearly US$400m in debt, bankers expect the
COMPANYSûSTRONGûCASHmOWûTOûREDUCEû
leverage to one to two times net debt/Ebitda
by 2020.
Anthony HughesEQUITIES
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