Third Time Lucky? Cambodia Sets New Date for Second Listing

Wall Street Journal | 9 June 2014

Cambodia’s stock exchange is set to see its second-ever listing on June 16 as a Taiwanese-owned garment maker prepares for its trading debut after a $19.3 million initial public offering.

Grand Twins International (Cambodia) PLC has approval to list from June 16, the Cambodia Securities Exchange said in a disclosure on Saturday. The IPO’s underwriter, Phnom Penh Securities, said last month Grand Twins hoped to list on June 12.

The listing has been pushed back twice. Grand Twins first set its debut for May 8 before delaying three weeks because of hold ups in regulatory approval. It then postponed the listing until May 29 citing public holidays.

Grand Twins sold 8 million shares, or 20% of the company, at $2.41 each in its IPO, which was oversubscribed, Phnom Penh Securities has said. The price is below the midpoint of an indicative range of $1.85 to $3.50 a share.

Interest in the offering was hurt by concerns over the prospects for Cambodia’s garment industry which has experienced labor unrest and rising costs, analysts and brokers said.

Underwriters and brokers hope the Grand Twins IPO may rejuvenate Cambodia’s stock market which has struggled since its first listing in April 2012–the $20 million flotation of state-owned Phnom Penh Water Supply Authority.

Two other state-owned enterprises, a telecommunications company and a port operator, shelved plans to list by the end of 2012.

Others haven’t met regulatory requirements or have decided to hold off until the market gains depth and liquidity. Grand Twins, for instance, considered listing as early as 2012 but put it off owing to compliance issues and concerns about market liquidity, its IPO underwriter has said.

Grand Twins, whose primary customer is German sportswear company Adidas, had $54.9 million in revenue in 2012–mainly from apparel exports to retailers in Europe and the U.S.

Tens of thousands of garment workers in Cambodia went on strike from late December until early January over wages and unions have threatened fresh action unless officials raise the industry minimum wage to $160 a month–$60 more than the government’s latest offer.