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Thailand's SCG Packaging set to raise $1.5bn in IPO

Demand for Siam Cement unit shows investor confidence despite economic woes

A man walks past the logo of Siam Cement in Bangkok. The group is one of Thailand's biggest industrial companies, the biggest shareholder of which is King Maha Vajiralongkorn.   © Reuters

BANGKOK (Financial Times) -- Siam Cement Group's packaging unit is set to raise nearly $1.5 billion in an initial public offering, signaling investor confidence in one of Thailand's industrial champions despite economic woes and anti-government protests.

SCG Packaging on Thursday priced shares at 35 baht ($1.12) each, or at the top end of an indicated range, people close to the IPO told the Financial Times. SCG did not respond to requests for comment on the pricing, which was first reported by Reuters.

The share offering is Thailand's biggest since Central Retail's $2.5bn stock market listing in early February, which was priced at the beginning of the coronavirus pandemic. That IPO is the country's largest on record and Southeast Asia's biggest this year.

SCG is one of Thailand's biggest industrial companies. Alongside one of Southeast Asia's leading packaging businesses, it operates large cement and petrochemical units that have been hit by falling regional consumption, exports and construction due to the pandemic.

The Thai parent group's largest shareholder is King Maha Vajiralongkorn, who owns a 33.6% stake. The packaging unit will sell up to 1.3 billion shares, or nearly 30% of the total issued.

Thailand's economy, Southeast Asia's second-largest, is set to contract by 7.8% this year, the central bank said this week. It forecasts the economy will take at least two years to recover from the impact of the pandemic.

A youth protest movement has for the past three months been confronting the government of Prime Minister Prayuth Chan-ocha and the powers of the monarchy, causing some institutional investors to withdraw funds from Thailand. The country's stock market has fallen nearly 20% this year.

SCG benefits from its large manufacturing hub in Vietnam, which has emerged as an alternative to China for multinational exporters as trade frictions between Washington and Beijing escalate. Even before the pandemic, Vietnam was one of Asia's fastest-growing economies.

Packaging "is the best growth offering among the three key businesses of Siam Cement Group," said Suchart Techaposai, head of Thailand research at brokerage CLSA. "Looking forward, they can profit from ASEAN population growth, the growing middle class, and their presence in Vietnam."

Stock market listings in Southeast Asia have proved resilient despite the pandemic. According to Refinitiv data, regional IPOs have raised $4.71 billion this year, excluding SCG Packaging's proposed listing. That is down only slightly from $5.75 billion in the same period a year ago.

In the Philippines, broadband provider Converge ICT Solutions this week began a roadshow for a share offering set to raise up to 32.9 billion pesos ($680 million) in what is expected to be the country's biggest ever IPO.

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