Thai bourse looks to lure “sexy” companies as it targets 30-50 IPOs per year

Stock prices are displayed on an electronic stock board at the Stock Exchange of Thailand (SET) in Bangkok, Thailand, on Friday, June 22, 2018. Photographer: Brent Lewin/Bloomberg

The Stock Exchange of Thailand is putting all its effort into developing new measures to lure listings from “sexy” companies and small- and mid-sized enterprises, aiming to become the leader among Southeast Asian stock markets.

“We would like to have 30 to 50 IPOs at the SET each year, with them raising roughly 250 billion baht ($7.8 billion) per year,” Pakorn Peetathawatchai, the president of the exchange, told Nikkei Asia in an online interview. “We would like to see the same amount of secondary offerings as well,” he added.

The exchange appears to be on track to achieve the target. As of June 28, it had added 15 new listings so far this year, including nine in its “Mai” segment for high-growth and emerging stocks. These companies raised 101 billion baht through their IPOs, adding 341 billion baht to the bourse’s market capitalization.

The exchange has been successful in leading the Southeast Asian IPO market so far. Between January 2015 and May 2021, $23.2 billion were raised through IPOs at the Thai bourse, 2.3 times the total at the Singapore Exchange.

Southeast Asian bourses such as the Singapore Exchange and the Indonesia Stock Exchange are keen to follow the U.S. boom in IPOs for so-called SPACs, or special purpose acquisition companies — cash shells that raise funds and then acquire a company. However, the SET is trying to increase the value of the entire exchange in a more traditional way.

Pakorn said he would rather focus on the supply of company IPOs that are attractive to investors. “People always mention that we don’t have that many ‘sexy’ companies, especially those in the ‘new normal’ [post-pandemic] world,” he said, referring to technology and digitally focused companies. “We would like to be a funding source for them so that the capital market we build is for everyone.”

The bourse has been working with the Bangkok government and regulators to make going public more attractive. On May 20, the Thailand Board of Investment, a government agency, introduced an incentive package, which grants newly listed companies a 100% corporate income tax exemption on the value of the investment, as well as other tax incentives.

On May 19, the SET amended its listing requirements to make it easier for companies in target industries, such as next-generation automotive, robotics, aviation and logistics, medical and wellness tourism, biotechnology, and nanotechnology, to list. The amendments include a measure that, if the company meets certain requirements regarding its market capitalization and business track record, other parts of the normal listing rules will be relaxed.

Pakorn said the bourse, together with Thailand’s Security and Exchange Commission, is looking to review some rules, such as the investment ratio, which are too stringent for foreign companies seeking to list their shares.

The president insisted that listing companies must match with the strengths of the Thai economy for their listing to be sustainable. He hinted that he would encourage Flash Group, Thailand’s first-ever unicorn and provider of courier services in rural areas, to list at the bourse. “We are very strong at logistics,” Pakorn said.

Another logistics provider — Kerry Express Thailand, the local subsidiary of Hong Kong-listed Kerry Logistics Network — went public at the bourse in December 2020.

The SET’s strength may lie in its wide variety of listed companies, which range from oil groups to commercial banks, telecommunications and major retailers, and thus its appeal to a mix of investors. As of May, 48% of the average daily trading value was taken up by local retail investors, while foreign investors traded 35%. Prop traders and local institutional investors took the rest at 17%. “We don’t want it to be a market that is churning too much,” Pakorn said, describing the current mix as appropriate.

To provide better financial infrastructure for companies and investors, the Stock Exchange of Thailand is planning to introduce a trading platform for asset-backed digital tokens. The platform will allow the trading of securities in smaller fractionsthan originally issued. Companies may be able to count on demand from investors with less funding behind them, while investors will be able to diversify their portfolios more easily.

The launch of the platform will be in the fourth quarter this year, according to the SET president.

In May, the SET recorded an average daily turnover that was three times larger than Singapore Exchange and Bursa Malaysia, pulling far ahead of other exchanges in ASEAN. It trails only behind SGX in its combined market capitalization.

The SET no longer openly promotes a target — set in 2018 — to reach an aggregate market capitalization of 23 trillion baht by 2023. It stood at 18.6 trillion baht as of May. The figure is often affected by uncontrollable factors.

In the early 2010s, exchanges in Southeast Asia worked to improve connectivity through making trade links. However Thailand, Singapore and Malaysia scrapped their links in 2017. Pakorn now suggests that the exchanges aim to create attractive investment products that cover the region, instead of physically linking their networks.

“If we can have our market offerings stronger as products, we could attract not just regional investors, but also global investors,” he said.

The article was first published on Nikkei Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.