Tim Human speaks to the teams behind two of South East Asia’s largest IPOs this year
South East Asia’s IPO market has picked up steam in 2021 despite the ongoing impact of the Covid-19 pandemic. The region saw $9.5 bn raised in the first nine months of the year, more than 50 percent up on last year’s figure and the highest total since 2012, according to data firm Refinitiv.
Proceeds have been driven by a few mega-deals rather than high volumes. At the end of the third quarter, the top four listings accounted for 59 percent of total funds raised, says Refinitiv. IPO numbers, meanwhile, are roughly flat compared with last year.
Companies going public have had to contend with continuing restrictions on travel and meetings as a result of the pandemic. Some have also experienced heavy retail interest, given the high-profile nature of their brand and local market rules that encourage participation from ordinary investors. Below, we check in with the teams behind two of the year’s biggest IPOs to find out how they pulled them off.
Monde Nissin ‘The advisers on the deal were nervous people wouldn’t show up,’ says David Nicol, chief strategy officer at Monde Nissin. When the Philippine food and beverage company went public in early 2021, it approached the IPO roadshow in a non-traditional way.
Rather than conduct a series of one-on-one presentations – a process Nicol describes as ‘ghastly’ – the company held three big events across different time zones with all professional investors invited. After that, every subsequent meeting was Q&A only. ‘Our chief executive, who’s a very visionary sort of guy anyway, said, Let’s just do this differently,’ says Nicol.
The company attracted significant interest from global funds due to the combination of its market-leading noodles and biscuit brands in the Asia-Pacific region and ownership of Quorn Foods, a major player in the fast-growing meat-alternative industry. Following an intense IPO process squeezed into a couple of months, Monde Nissin went public on the Philippine Stock Exchange on June 1, raising P48.6 bn ($1.1 bn) in the country’s largest ever listing.
Nicol says more than 175 people came to the first and second roadshow events, with the numbers dropping off a bit for the third. ‘Everybody got the spiel from the get-go, and we only had to deliver it three times live,’ he says.
‘We were able to insist that every subsequent meeting was Q&A only. I would say more than 90 percent of the meetings worked. There were one or two where it was clear someone hadn’t followed the guidance. Then we had to regroup. But we had a short version of the presentation to help us through that.’
Video versions of the presentations were uploaded to the NetRoadshow website, too. Nicol says that if there was anything he could change about the IPO in hindsight, it would be that the performances in the videos were less wooden. ‘What we learnt is that we’re not actors for good reason,’ he says.
Intense schedule Of course, Monde Nissin’s IPO roadshow was never going to be completely traditional in nature given the need to run meetings virtually in the Covid-19 environment. Anecdotally, IR Magazine has heard numerous accounts that virtual IPO roadshows are a big hit with management teams. Executives can efficiently deliver meetings from home, shortening the IPO window and cutting out exhausting global travel.
But in Monde Nissin’s case, the virtual process still felt very intense. ‘With Zoom, people have a tendency to allow zero time between meetings,’ explains Michael Paska, director of corporate business development at the firm.
‘We started at 8.30 am and probably finished around 11.00 pm, and it was pretty much non-stop for several weeks. It was a very efficient way of meeting and talking to people but, at the same time, there was an intensity to it you might not have had if you were physically putting space between different meetings and traveling in different cities.’
Another factor the company had to manage was the heavy involvement of retail investors in the IPO. Under Philippine listing rules, at least 10 percent of shares must be offered to small local investors.
The company held additional live events for the retail market. ‘I prepared a different presentation for that because you’re pitching to a different audience,’ says Nicol. ‘If you’re pitching to some global giant investor that’s going to put a couple of million dollars into your firm, it’s taking a very long-term bet. The retail market is interested but not quite on the same timescale.’
Convincing the retail market One issue Monde Nissin had to contend with in the local market was the perception that IPOs tend to struggle after listing. ‘There was something of a history of Philippine IPOs going down in price,’ says Nicol. ‘If you are a retail investor, you are saying, I’m not going to get into this thing at the get-go. I’m going to wait and see what happens. My impression was that a lot of the domestic investors were a little bit nervous because of the size of the deal and the pandemic.’
‘In the domestic market, there was a perception that the price was expensive,’ adds Paska. ‘Part of it was that investors needed to come up to speed on the meat-alternative segment. That’s something [where] we did spend a significant amount of time with institutional investors. I think it was a challenge to get local investors to also appreciate that angle.’
While the Monde Nissin stock did dip very slightly on its first day, closing down 0.15 percent to P13.48, it quickly established an upward trend and in September passed the P20 mark. ‘The size of this transaction shows that [you] don’t [need to] be afraid: you can transact a good IPO in the Philippines,’ says Nicol.
PTT Oil and Retail Thailand’s blockbuster listing of PTT Oil and Retail (PTTOR), which took place in February, also saw heavy retail involvement. In fact, the IPO saw the highest number of subscriptions – 530,000 – ever recorded by the Stock Exchange of Thailand (SET).
PTTOR, which operates thousands of gas stations, as well as coffee shops under the Cafe Amazon brand, is the retail arm of state-owned energy giant PTT. The sale of 25 percent of the business raised THB53.5 bn ($1.8 bn), the largest IPO in South East Asia in the first nine months of the year.
A well-known brand in Thailand, PTTOR garnered high interest from ordinary investors. Adding further publicity, PTT executives and Thai politicians talked up the opportunity for retail holders to share in the company’s expansion.
‘PTTOR has inclusive growth top of mind when it comes to conducting and growing our business,’ Phichin Aphiwantanaporn, the company’s CFO, tells IR Magazine.
‘When we say inclusive growth, what we essentially mean is that we want our community, our society, our partners and our stakeholders to grow with us – and hopefully the country to grow with us as well.’
The company initially offered 595.7 mn shares to retail investors, representing roughly 20 percent of the total issuance, and later expanded that figure to meet additional demand. The minimum amount each private investor could buy was set at 300 shares, costing around THB5,400.
Retail investors received special attention through a system called ‘small lot first,’ explains Saengtawan Prasittisuk, deputy vice president of foreign institutional investors at SET. This allocation method gives first priority to retail investors who subscribe to the minimum amount, so the shares ‘can be distributed as much as possible,’ he says. The IPO of Thai micro-credit provider Ngern Tid Lor in May also used the small-lot system.
IPO roadshow The IPO roadshow process started with institutional meetings in October 2020, says Aphiwantanaporn. ‘We conducted most of our meetings with potential cornerstone investors and the public roadshow virtually,’ he explains. ‘We used platforms such as MS Teams, Zoom and WebEx for meetings, and for the public roadshow we hosted the event virtually via the Facebook Live function on our official Facebook page.’
While PTTOR couldn’t travel to meet foreign investors, technology made it ‘convenient’ to arrange meetings with them, notes Aphiwantanaporn. ‘In total, we engaged with investors in eight different cities and managed to cover top-quality international and domestic institutional investors globally,’ he says. He adds that a small number of meetings with domestic institutions were held physically, with limits on the number of people who could attend and social distancing measures maintained at all times.
Amid high demand for the IPO, PTTOR decided to hand the full over-allotment of 390 mn shares to retail investors and some domestic institutional investors, leaving out overseas firms. ‘The growth and success PTTOR has had throughout these years could not have been possible without the strong support of the Thai people,’ says Aphiwantanaporn. ‘We believe it was fitting to demonstrate that we prioritize Thai investors for this deal.’
Retail profit The clamor for shares led PTTOR to pop 50 percent on the first day of trading, handing all those retail investors an immediate profit. The stock has since surged and fallen back, but remains about 50 percent up on the IPO price.
The proceeds will be used in part to develop PTTOR’s network of gas stations. While demand for fuel is uncertain given the growth of the electric vehicle market, the company is betting on drivers using coffee shops and restaurants as they wait for their electric cars to charge up. Funds will also be invested in distribution centers for its oil business and expanding services overseas.
As with other PTT subsidiaries, PTTOR has its own IR team to manage communications with the market. There are six people in the team: one vice president of IR, one IR manager and four IR officers.
‘PTT Group has an established IR workstream, where IR representatives from each of the flagship [affiliates] co-ordinate and communicate regularly, hold regular meetings to update on IR workstream initiatives, set up PTT Group events, align on any internal code of conduct and align schedules – mostly earnings release conference calls and analyst meetings to avoid any conflict,’ says Aphiwantanaporn. ‘Once new regulations are imposed, we have strong collaboration with other IR teams in the PTT Group, where there’s continuous sharing of knowledge and experience over various issues to further enhance our learning together.’
PTT Oil and Retail
$1.8 bn
Thailand
Energy and power
February 2, 2021
Bukalapak.com
$1.5 bn
Indonesia
Retail
July 30, 2021
Ngern Tid Lor
$1.2 bn
Financials
April 27, 2021
Monde Nissin
$1.1 bn
Philippines
Food and beverage
June 1, 2021
RL Commercial REIT
$430 mn
Real estate
August 20, 2021
Data as at September 30, 2021 Source: Refinitiv
