First Myanmar Investment (FMI) Company will be the first, and for the time being the only, company to launch an initial public offering (IPO) on the Yangon Stock Exchange (YSX) when it opens later this year, according to company chair Serge Pun.
Speculation over which firms will attempt to list has intensified as the exchange gets closer to launch – though deputy finance minister Dr Maung Maung Thein yesterday dismissed the claim that only FMI will be ready, saying it is too early to tell.
Mr Pun said that many companies had initially shown interest in listing, but the number has declined closer to the launch.
“It started with many companies, but as we grow closer to the date I am told that we are the only company. That bothers me but it’s too late. We’re in, so we will be there,” he said during a Banyan Tree Leadership Forum held by the Centre for Strategic and International Studies (CSIS) in Washington DC last week.
In late 2014, FMI announced that it had signed an engagement letter with Japan’s Daiwa Securities and the Myanmar Securities Exchange Centre for advisory services ahead of its IPO.
Daiwa’s sister company Daiwa Institute of Research and Myanma Economic Bank, a state-owned bank under the Ministry of Finance, signed an agreement last December to establish the Yangon Stock Exchange, which is Myanmar’s first ever bourse. At the moment, shares in public companies are traded on an over-the-counter (OTC) basis.
Once the agreement had been signed, the Ministry of Finance invited a number of businesses to list, from among the 200 public firms under the Directorate of Investment and Company Administration.
Several other companies have announced their intention to debut on the exchange, including Asia Green Development (AGD) Bank and Myanmar Agri-Business Public Company (MAPCO).
However, neither is likely to be ready to IPO this year, according to a source at the Myanmar Securities Exchange Centre, a joint venture between Daiwa Securities Group and Myanma Economic Bank.
Neither AGD Bank nor MAPCO were available for comment by deadline yesterday.
Dr Maung Maung Thein, who is also chair of the Securities and Exchange Commission of Myanmar, said it is too early to say how many companies will list, as the listing criteria is not yet complete.
“We haven’t even decided who will qualify yet,” he said. “The criteria for listing have not yet been approved by the authorities.”
The criteria that must be met for companies to attempt a listing is almost finished, according to Dr Maung Maung Thein. After that, a list of eligible companies will be made public.
“We cannot say a definite time. If the criteria are too stringent, there will be no companies at all. If they are too lenient, that is not good for the market, so we are thinking about these two extremes and trying to strike a balance,” he said.
The stock market is on track to open toward the end of this year, he said. “Seventy percent of the preparation has been finished.”
This is the second time that Daiwa and Myanma Economic Bank have attempted to open a stock exchange in Yangon.
“In 1994, during the first attempt, we were invited to list, as we were the only public company in the country,” said Mr Pun in Washington last week. “I said, ‘I have one condition, I want the serial number 001.’ They said, ‘good, you’ve got it.’ I asked who else was going to be listed. They said, ‘no one else, only you’,” he said.
“I didn’t want to be in the middle of a circus with everyone looking in and absolutely no benefit [to the company] so we didn’t list. As a result the stock exchange didn’t happen for nearly 20 years.”
The difference today is that there is some understanding of what needs to be done to develop a functioning capital market, he said, although there is still a long way to go.
“It would be naïve and a folly to think it will be anywhere near what a stock exchange should look like. It will not. But it’s a good start. Without this start it will never [become] what it should be,” he said.
Source: Myanmar Times