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Siam Cement Group Packaging leads Southeast Asian firms eyeing October IPOs

SINGAPORE/HONG KONG, Sept 2 (Reuters) - Thailand’s Siam Cement Group Packaging’s initial public offering (IPO) is looking to raise 50% more than a previously targeted $1 billion, boosted by higher valuations, sources with knowledge of the matter said.

The firm joins other companies in Malaysia and Philippines preparing to list next month, signalling a revival in investor interest in Southeast Asia’s underperforming markets.

The sources said cash-rich funds and investors were keen to allocate money to sectors viewed as long-term beneficiaries in pandemic-hit markets.

They said Siam Cement Group Packaging was looking to line up cornerstone investors for its IPO, which is now likely to raise $1.5 billion, up from an estimated $1 billion when the company announced plans a year ago. The company did not respond to a Reuters request for comment.

“As we moved through the course of the year, investors are valuing it higher, at 2021 earnings,” said one source, adding that business was stable this year.

Fundraisings from Southeast Asian IPOs are at $4.6 billion so far this year, up from $3.1 billion a year ago, Refinitiv data shows, mainly due to $3 billion raised by Thailand’s Central Retail in February.

Debt investors are also piling in. In July, Thai energy firm PTT sold a 50-year bond and Philippines’ San Miguel also issued debt.

“There is strong interest from a global investor base on growth opportunities in Southeast Asia, especially in the context of maintaining diversified emerging markets exposure,” said Vijay Vaidyanathan, Morgan Stanley’s head of global capital markets for Southeast Asia.

“While the recovery in Southeast Asian IPO markets is not yet broad-based, we are starting to see some meaningful transactions for companies that are benefiting from structural shifts due to the pandemic or, at a minimum, are exhibiting COVID resilience in their financial performance,” he said.

The Philippines’ equity index has dropped 27% so far this year, Thailand’s main index has lost 17% while Malaysia has shed 4% compared with an 11% drop in Hong Kong and a 12% rise in Shanghai.

Bankers said they were keeping a close watch on uncertainty in policy-making in Thailand but the presence of a large pool of retail investors usually supported IPOs.

In Malaysia, home improvement retailer Mr DIY is talking to investors about launching its up to $500 million IPO next month, sources said. The company did not respond to a Reuters request for comment.

Philippines’ fibre broadband services provider Converge ICT Solutions which filed for an IPO of up to $725 million, cashing in on a surge in home working, is seeing strong demand for its issue, which is set to hit the markets in October. The company declined comment. (Reporting by Anshuman Daga and Scott Murdoch; Additional reporting by Neil Jerome Morales in Manila, Chayut Setboonsarng in Bangkok and Tom Westbrook in Singapore; Editing by Emelia Sithole-Matarise)

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