No new shares to trade on YSX until July: underwriters

The first long-awaited initial public offerings on the Yangon Stock Exchange will not include any new shares, said underwriters, while the first company to raise fresh capital is unlikely to list until July.

 

The YSX opened last December to much fanfare but with no stocks to trade. Crowds gathered, a giant bell was rung and officials announced that six companies were eligible to list.

Since then, the market has been quiet.

Two of the six companies, First Myanmar Investment (FMI) and Myanmar Thilawa SEZ Holdings (MTSH), have been transferring existing shareholders from their physical share certificates to digital accounts.

These will allow shareholders to trade their stock on the exchange, which they will be able to do within the next month, though neither company plans to issue new shares. FMI shares currently trade at around K35,000 each, while MTSH trades at around K80,000.

Interviews with the other four companies revealed that three of them – First Private Bank, Myanmar Citizens Bank and Myanmar Agribusiness Public Corporation – also have no plans to issue new shares. The fourth, Muse-based Great Hor Kham, will be the first to attempt to raise new capital in July.

The company has hired KBZ Stirling Coleman to underwrite the deal, according to Great Hor Kham’s external auditor U Zaw Zaw Oo. However, the valuation and number of shares to be issued is still under review, he said. The company has around 50,000 outstanding shares.

Meanwhile, four underwriters have started operations – KBZSC, AYAtrust Securities, CB Securities and Myanmar Securities Exchange Centre. All four are accepting new orders for customer accounts on the new YSX system.

In addition to helping the six companies take their shareholder base digital, the underwriters say they are scouting for new companies that might be eligible to list.

U David Soe Lin, managing director of AYAtrust Securities, said apart from MTSH, his firm is in discussions with eight other companies about a potential listing. Their target timeframe for launching an IPO is at least eight to 12 months, he said.

“As it is a very thorough process, we will work together with our partner firms who have experience of stock markets in their own countries,” he said.

Before considering an IPO, companies must hire a law firm to ensure compliance with legal requirements, make sure their corporate governance is of a suitable standard and write a prospectus, he said.

KBZSC director U Zaw Lin Aung said a number of new companies are being set up with a view to listing on the exchange. “It will not take much time for these companies to get their accounts in order, hopefully no more than six months,” he said. “Around 10 such companies have the potential to be ready for a share offering in this time frame.”

Some of the underwriters plan to enter other related businesses such as private equity, while others plan to offer cash management services.

KBZ managing director U Nyo Myint previously said the group also has ambitions on the buy-side. “We will try to enter the investment market as well,” he said.

AYATrust will offer financing through its parent company AYA Bank, boosting capital levels at newly formed companies so that they are strong enough to list “as soon as possible”, said U David Soe Lin.

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