Total Access Communication raised Bt8.88 billion ($275 million) after fixing the price of its offering at Bt40 per share after the offering closed at mid-day yesterday (June 13). The shares had been offered in a range between Bt35 and Bt42. According to sources the demand was sufficient to price at the top of the range, but given that the end of the one-week roadshow coincided with a return of political uncertainties, including rumours of another coup, the company chose not to be too aggressive.
The Thai stock market lost 2.3% in yesterdayÆs trading and has shed a combined 5.7% over the past seven trading days. It is still up 47% year to date, however,
Total Access, which operates mobile phone services in Thailand under the DTAC brand, is already listed in Singapore and will be the first Thai company to have a dual listing in Singapore and Bangkok. It is also the first IPO or equity offering of size by a Thai company this year, which helped attract buyers to the deal.
The final price represents an 8% discount to the companyÆs Singapore-traded shares, which closed at $1.24 yesterday. The shares have rallied 21.6% since mid-May after the company implemented a one-to-five share split in an attempt to boost liquidity.
Sources close to the offering said some international investors withdrew their orders on the final day of the bookbuilding as a result of the political jitters, but at the same time there were several players who view the increased noise as a buying opportunity and chose to increase their orders. The final book was said to have included several dozens of institutional investors.
Given that the deal wasnÆt open to onshore US investors, the bulk of the orders came from Asia. In terms of types of investors, long-only funds were in majority, sources say.
Of the total amount of shares on offer, 52% went to institutional investors and of this around two thirds were allocated to international accounts. To get around regulations limiting the foreign ownership at 49%, the international investors were buying so called non-voting depositary receipts rather than ordinary shares. Each DR is equal to one ordinary share and except for the lack of voting power the two instruments are identical. Some overseas investors are however prevented from buying NVDRs due to internal guidelines, which was something that had to be taken into account during the marketing.
At present most of the companyÆs foreign ownership quota is eaten up by the Singapore-listed shares and the stake held by NorwayÆs Telenor, which is a strategic partner and the second largest shareholder in the company.
JPMorgan and local firm Kasikorn Securities were joint bookrunners for the offering, which accounted for 9.4% of the companyÆs total issued share capital. The company offered 222 million shares, of which 82 million were new and 140 million came from existing shareholders.
Until now, Total Access has been prevented from listing in Thailand because of a regulation that prohibits a parent company and a subsidiary from both being listed if they offer exposure to largely the same assets. Prior to this IPO, Total Access has been 43% owned by UCOM, which is already listed in Bangkok.
To pave the way for Total Access to trade on its home turf, UCOM will now be taken private and de-listed. UCOM shareholders who wish to do so, can exchange their UCOM shares into shares in Total Access to maintain their exposure to the telecom sector.
Part of the attraction of obtaining a listing in Thailand, sources say, is the fact that the stock is expected to be more liquid in the domestic market. In Singapore it trades no more than $300,000-$500,000 worth of share per day, which is low for a $2 billion company.
After the Thai share offer, 16% of the issued share capital is listed in Singapore and while this is significantly larger than the less than 10% that will trade in Thailand the expectation is that over time investors will convert their Singapore shares into Thai shares, sources say.
There will also be a financial benefit to the company from the dual listing as the corporate tax rate will fall to 25% from 30% as a result of the company being listing in its home market.
Among the potential earnings drivers going forward is a possible change to the interconnection regime in Thailand, which, if implemented, should be more beneficial to Total Access than to its competitors because of their relative starting points, one source notes.
The number of mobile subscribers in the Thai market is also expected to increase further, although the competition in the sector is likely to result in the operators continuing to lowering their prices in an attempt to maintain market shares. Consequently, the slight downward trend in margins is set to continue, analysts say.
As of the end of March, Total Access had about 13.3 million subscribers, giving it a market share of 30.7%. Of the total, which was up 35.7% from a year earlier, pre-paid customers made up 11.0 million.
The shares are due to start trading on June 22.
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