Cambodia's Second Stock Listing Delayed

Grand Twins Delays Listing to May 29 from May 8

Wall Street Journal | April 18, 2014

A Taiwanese-owned garment maker has delayed its planned Cambodia listing by three weeks, setting back what would be just the second initial public offering to be held in this developing Southeast Asian nation.

Grand Twins International (Cambodia) PLC now plans to list on May 29, according to a statement posted Friday on the website of the IPO's sole underwriter, Phnom Penh Securities. The company had been preparing for a May 8 listing after completing last month an order-taking process for its up to $28 million IPO.

The statement didn't say why Grand Twins pushed back the listing, which if successful, would end a two-year listing drought for Cambodia. However, two people with knowledge of the deal said it was due to delays in getting regulatory approval. 

Cambodia's securities regulator was due to give its final approval for the IPO last week, but pushed back its decision to April 23, the people said.

Grand Twins, which has production lines in Cambodia, plans to sell eight million shares, or 20% of the company, for between $1.85 and $3.50 apiece, according to its preliminary prospectus. Tepid demand, however, means the offering is likely to be priced at around $2.40, people with knowledge of the deal said.

Interest in the Grand Twins offering has been hurt by concerns over the prospects of Cambodia's garment industry, which is plagued by labor unrest and rising costs, these people said.

Cambodia's stock market has foundered since hosting its first-ever listing in April 2012, the $20 million flotation of state-owned Phnom Penh Water Supply Authority. Two other state-owned enterprises,—a telecommunications firm and a port operator,—were slated to list by the end of 2012, but those plans have been shelved.

Other IPO candidates have either struggled to meet regulatory requirements or decided to hold off until the market gains depth and liquidity. Grand Twins, for instance, had mulled listing as early as 2012, but delayed its plans over compliance issues and concerns about market liquidity, its IPO underwriter had said.

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 U.S.

Analysts have said that Grand Twins,—one of hundreds of garment makers in Cambodia,—faces a tough time courting investors amid labor unrest in the country's largest export industry.

Tens of thousands of garment workers went on strike from late December to early January to press for higher salaries, and unions have threatened fresh job actions unless labor officials raise the industry minimum wage to $160 a month—$60 more than the government's latest offer.