Bloomberg News

Cambodia May Lure Up to 10 IPOs a Year, Korea Bourse Says

April 13, 2012

Kim Bong Soo, chairman and chief executive officer of Korea Exchange Inc. Photographer: SeongJoon Cho/Bloomberg

Kim Bong Soo, chairman and chief executive officer of Korea Exchange Inc. Photographer: SeongJoon Cho/Bloomberg

Cambodia’s stock market, which is set to open next week after several delays, may be able to lure five-to-10 initial public offerings a year, according to Korea Exchange Inc., the Cambodian government’s partner in the bourse.

State-owned Phnom Penh Water Supply Authority (PPWSA) will start trading on April 18, while Telecom Cambodia and Sihanoukville Autonomous Port are preparing to go public, Kim Bong Soo, Korea Exchange’s chairman and chief executive officer, said in an April 9 interview at his Seoul office. Telecom Cambodia may list as early as October, according to Tong Yang Securities (Cambodia) Plc, which is managing the share sale.

“Cambodia is going to be a very attractive market as investors benefit from the nation’s economic development,” Kim said. “Many inquiries are being placed for possible listings.”

Cambodia is developing a capital market to lessen its reliance on aid that is equal to a 10th of the nation’s $11 billion economy. Growth may be around 6.5 percent this year, according to the Asian Development Bank, compared with an average of 8 percent between 2001 to 2010. The nation has said it’s seeking to spur economic development by privatizing its state-owned companies and encouraging private enterprises to expand with new funding.

Cambodia’s financial system was fractured in 1975 when the Khmer Rouge captured Phnom Penh during the final stages of the Vietnam War. Its Communist guerrillas blew up the central bank, declared its currency worthless and outlawed private property and trading. During leader Pol Pot’s reign, Cambodia’s fertile countryside became the killing fields where 1.7 million people, or 20 percent of the population, perished.

Phnom Penh Water

Plans for a bourse in Cambodia have been delayed several times since 2009, derailed by the global financial crisis, technical issues and lack of readiness among the nation’s companies.

Phnom Penh Water (PPWSA) raised about $21 million in Cambodia’s first initial public offering after pricing the shares near the high end of a marketed range, Han Kyung Tae, managing director of sale arranger Tong Yang Securities (Cambodia), said by phone on April 9. The firm is a unit of a Seoul-based Tong Yang Securities Inc. Phnom Penh Water’s IPO was priced at 6,300 riel ($1.58) a share.

“I believe dozens of companies will list their shares within five years,” Korea Exchange’s Kim said. “Listings of five-to-10 companies are possible a year.”

The Cambodian government, which offered the site and building for the bourse, holds a 55 percent stake in Cambodia Securities Exchange Co., while the Korean bourse operator, which provided information-technology systems, owns the rest. Korea Exchange holds 49 percent stake in Lao Securities Exchange, while the Laotian government owns 51 percent.

Myanmar Exchange

Korea Exchange, which oversees the world’s 13th-largest stock market, is helping Asian countries set up exchanges in return for stakes in the bourses and is seeking cross-trading partnerships in a bid to respond to mergers among global bourses. The Seoul bourse operator helped Laos open its stock market last year and is hoping to do the same for Myanmar.

Myanmar President Thein Sein has sought to reconcile with political foes and open the economy since taking power after 2010 elections that ended five decades of military rule. This month, the government floated its currency and held by-elections that included dissident Aung San Suu Kyi, prompting the U.S. and European Union to reconsider sanctions.

Tokyo Stock Exchange Group Inc. and Daiwa Securities Group Inc. had negotiated a “memorandum of understanding” to establish a stock exchange and develop the country’s capital markets, the companies said in an April 11 statement.

Cross Trading

Korea Exchange said in an e-mail yesterday that it will do its best to win the Myanmar government’s confidence until the Southeast Asian nation makes a final decision and enters into a binding agreement for the establishment of its exchange.

Last year, the South Korean bourse and Tokyo’s exchange began listing prices of each other’s equities and agreed to develop the technology to allow for cross trading, aiming to promote mutual-listing of exchange-traded funds and derivatives. Korea Exchange has proposed cross-trading partnerships with Turkey, Greece and Brazil, Kim said.

“Those countries are highly interested in our offer,” he said. “Securing many cross-trading deals is a necessity for our survival amid growing global competition among exchanges,” he said.

The Korean bourse is also contacting companies in Turkey, Greece, Brazil, Uzbekistan and Kazakhstan about listing their shares in South Korea, according to Kim.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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