Thai IPOs bank on local demand
Equities TFF readies jumbo listing, Osotspa cuts sizeBY S ANURADHAThailand may be one of the best
performers in the summer’s
emerging markets sell-off, but
the country’s two biggest listings
of the year show no signs of
banking on overseas support.
The government’s long-
awaited THAILAND FUTURE FUND
and consumer products group
OSOTSPA are set to sell most of
their stock to local investors
as they look to raise up to a
combined Bt61bn (US$1.9bn),
according to people close to the
deals.
TFF plans to start pre-
marketing its infrastructure
trust IPO of up to Bt45bn this
week and is targeting to openbooks in mid-October. The
toll-road portfolio would be
Thailand’s second-biggest IPO
on record, behind only the
Bt47.6bn 2013 listing of True
Telecommunications Growth
Infrastructure Trust, now called
Digital Telecommunications
Infrastructure Fund.
Osotspa is also due to open
books for an IPO of Bt13bn–
Bt16bn this week, after trimming
its targets during pre-marketing.
The focus on local investors
reflects global caution around
emerging markets investments
as a rising US dollar, worsening
US-China trade war and troubles
in Turkey and elsewhere sap risk
appetite. Even though Thailand’s
currency and stock market haveheld steady over the past month,
outperforming others in South
and South-East Asia, both issuers
believe local buyers will support
a higher price.
Infrastructure fund TFF,
owned by the ministry of
finance, plans to offer an annual
yield of around 4%–6%. Other
listed infrastructure funds trade
in a 6%–9% yield range.
“The yield is very tight and
with the kind of currency risk
going around in the region,
this will be a tough sell to
foreigners,” an ECM banker away
from the deal said.
The benchmark Stock
Exchange of Thailand Index is
down 4.6% year to date. Although
the Thai baht has been amongthe stronger currencies in South-
East Asia, holding steady against
the US dollar so far this year,
analysts said the outlook for
emerging market currencies is
weak on the likely adverse impact
of the US-China trade war.
The government, though, is
banking on local liquidity and
support. Local media quoted the
State Enterprise Policy Office
head Prapas Kong-Ied saying at
least 60% of the units will be
sold to retail investors, who will
be allocated units before the
institutional investors.
That would be a departure
from standard practice in a Thai
IPO, where the institutional
tranche is typically bigger
than the retail tranche and is
marketed first. A banker on the
deal, however, said the tranches
would only be decided after pre-
marketing.
Foreign investment in pastJapan claims Green CB first
Structured Equity Sumitomo Forestry carves new niche with ¥10bn financingBY FIONA LAU, CANDY CHANJapanese timber company
SUMITOMO FORESTRY introduced the
green concept to the convertible
bond market by sealing the
world’s first Green CB last week,
raising ¥10bn (US$90m) to
refinance a New Zealand project.
The deal, albeit small, is
significant as it extends the
reach of green financing, which
is becoming more popular in
the bond and loan markets.
But the lack of dedicated green
investors in the book suggests
that fund managers and issuers
may need more time to study
Green CBs before they become a
regular feature of the convertible
market.
Sumitomo sold the zero-
coupon five-year euroyen CB
last Tuesday at an issue price of
101% and offer price of 103.5%.
The conversion premium was set
at 20.04%, the mid-point of the
indicative range of 15%–25%.
The company plans to use
the proceeds to refinance the
2016 acquisition of about 30,hectares of woodland and related
forestry assets in New Zealand
for NZ$370m (US$266m then).
The CB has a second-party
opinion from Vigeo Eiris, an
independent environmental,
social and governance research
service, in keeping with the
International Capital MarketAssociation’s Green Bond
Principles.NO GREEN FUNDS
The prestige of being the world’s
first Green CB helped arouse
interest, and the deal was
about 2x covered with about 50
investors participating.However, it did not attract any
demand from funds dedicated to
socially responsible investment,
which so far are focused only on
straight debt instruments.
“Although some CB investors
reckon Green CB is a novel idea
and they are in the process of
establishing such a fund, we didNews