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Thai state-owned fuel retailer looks to raise $1.8bn in IPO

PTTOR float kicks off another promising year for country's stock market

PTTOR operates nearly 2,300 gas stations and also runs cafes and convenience stores.   © Reuters

BANGKOK -- The retail arm of Thailand's state-owned energy giant PTT is going public with a goal of raising 54 billion baht ($1.8 billion), as the domestic IPO market readies for what could be another stellar year.

PTT announced on Thursday that an initial share price of 16 baht to 18 baht has been set for ordinary shares of PTT Oil and Retail Business, or PTTOR. The final price will be announced on Feb. 3 after a Jan. 24-Feb. 2 bookbuilding period.

PTTOR intends to sell 2.61 billion shares with an option for an additional 390 million shares, accounting for 25% of share total. If the price settles within the range, PTTOR will pull in between 41.7 billion baht and 54 billion baht.

The PTTOR float extends the country's IPO boom, which is one of Southeast Asia's largest over the past few years. In 2020, mall operator Central Retail raised 78.1 billion baht while SCG Packaging pulled in 45.3 billion baht when it went public. These came on the heels of Thai conglomerate TCC Group's property arm Asset World raising 48 billion baht in 2019.

Thailand accounted for over 60% of Southeast Asian IPOs in 2020. On Jan. 8, the Stock Exchange of Thailand said it seeks to boost market capitalization by 500 billion baht through IPOs and secondary listings this year. This would follow last year's 555 billion baht rise in market cap due to pricey IPOs.

As of September, PTTOR operated 2,297 gas stations, as well as 3,440 coffee shops under its Cafe Amazon brand. It also manages 2,046 convenience stores.

PTTOR's domestic gas station business accounted for 91% of the total income of 319.3 billion baht for the nine months until September. Net profit stood at 5.8 billion baht, down 35% from the same period the previous year.

According to PTTOR's prospectus, the company will allocate 13.3 billion baht from the IPO to grow its network of gas stations, 9.8 billion baht for its retail network, 8.5 billion baht for oil storage and distribution centers, and 5 billion baht to 9.5 billion baht for foreign businesses.

U.K.-based research company Wood Mackenzie said PTTOR held 39% of the domestic market for gas station fuel sales in 2019. Local rivals PTG Energy and Bangchak each held about 15%, while foreign players Royal Dutch Shell and ExxonMobil each accounted for 11%.

The IPO could push PTTOR further ahead of the competition. In October, the company's parent revealed a plan to increase PTTOR gas stations to 2,500 by 2024.

But PTTOR's cafe business faces stiffer challenges. While it dominates locations fronting buildings, Starbucks is much more prominent in shopping malls and as standalone shops on the street.

The plan to spin off and list PTTOR was approved by PTT shareholders in 2017 as early as 2018. But this was delayed due to hurdles encountered when trying to transfer assets from the state-owned parent.

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