Foreigners buoy PTT price
November 22, 2001
Foreign investors have oversubscribed to the shares allotted to them by PTT Plc by more than five times, leading the state-owned petroleum company to mark its initial public offering (IPO) price at Bt35 a share.
"PTT has been doing very well, with foreign investors oversubscribing the issue by five and a half times. This is positive for the Thai market as a whole," said one of PTT's financial advisers.
This followed an international road show to woo foreign investors to buy into the privatisation issue. PTT is offering 920 million shares to investors, including 120 million set aside by the Finance Ministry in a "green-shoe" option.
Overall, PTT will raise US$631 million (Bt28.3 billion) from this round of privatisation, the proceeds from which will be used to pay off its debt and to finance its pipeline expansion.
Yesterday, financial advisers of the PTT were busily reviewing the outcome of the book-building in the New York market. PTT's road show covered markets in Singapore, Hong Kong, Europe and the United States.
The unexpected success has led the company to price its IPO at the top of the Bt31-Bt35 range.
"We have pegged the IPO price at Bt35 due to the overwhelming interest from both the local and foreign institutional investors," said Manu Leophairoj, chairman of PTT.
Initially, PTT was nervous that its issue might fail to attract the interest of global investors due to poor sentiment in capital markets as well as the ramifications of the September 11 attacks on the US.
This led PTT to test the water by pricing its IPO at between Bt31 and Bt35 a share. Due to the overwhelming response from local and foreign investors, it is now able to fetch Bt35 a share.
Foreign institutional investors oversubscribed the issue by more than five times compared to about three times for the local institutional investors, he said.
Local investors will snap up 65 per cent of the privatisation issue, against 35 per cent for foreign institutional investors. Earlier, PTT had set the ratio at 60:40, but it later decided to increase the allotment for local investors due to stronger-than-expected demand in the home market.
When PTT stocks were offered to local investors last week, 220 million shares were subscribed to via bank counters in a record 85 seconds. However, there have been some questions raised over the method by which the subscription process was handled.
Manu said the PTT expected to announce today the names of investors on the waiting list.
After the privatisation, the Finance Ministry will see its stake in the PTT fall from 100 to 67 per cent.
PTT stocks will start trading on the Stock Exchange of Thailand on December 6.
A local fund manager said foreign institutional investors believed that, considering the company's fundamentals, the stock was a little overpriced.
But foreign investors could not afford to stay on the sidelines considering the great hype surrounding the IPO, he said.
They might not hold on to their stocks for as long as PTT had expected if the price jumps sharply in early trade, he added.