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Companies prepare for Yangon Stock Exchange listings next year

Preparations are underway for the first companies to attempt a listing on the Yangon Stock Exchange early next year, though progress is slower than expected, as only the name of one securities company has so far been announced.

The names of six companies that meet – or are close to meeting – listing criteria issued in August were announced at the launch of the exchange on December 9. While the exchange is nominally open, the first trades are not expected until February or early March next year.

First Myanmar Investment (FMI) Company, First Private Bank Limited, Great Hor Kham Public, Myanmar Agribusiness Public Corporation (MAPCO), Myanmar Citizens Bank and Myanmar Thilawa SEZ Holdings Public, are all expected to list next year.

Sources at the companies say they have been busy.

U Thura, head of investor relations at MAPCO, said his company is working closely with the Securities and Exchange Commission of Myanmar, Daiwa Securities and the Yangon Stock Exchange in preparation.

The company stopped selling over-the-counter shares at K10,800 just before the new exchange opened, and plan to list next March, he said.

However, progress was hindered because MAPCO only knew the name of one underwriter, he said.

“By the time the exchange opened we only knew the name of one securities companies, and were waiting to hear who the other nine were, so that we could pick the best one,” he said.

“Once we can make an informed decision about this, then we can start discussing how many shares to issue and the pricing.”

The Myanmar Securities and Exchange Commission has reportedly chosen 10 underwriters, which will help prepare the companies for listing and bring them to market, though officials have only announced the name of one – KBZ Stirling Coleman.

The other nine names will be announced once final licences have been awarded, officials previously said.

Sources at the companies said subsidiaries of Asia World Group, AYA Bank, CB Bank, Daiwa Securities and Myanma Economic Bank, Green Circle Company, Innwa Bank, KBZ Bank, Loi Hein Company, United Amara Bank and Young Investment Group have been granted provisional licences.

Once it has held discussions with its chosen underwriters, MAPCO will resubmit its prospectus to the stock exchange, said U Thura.

U Tun Tun, chief financial officer of FMI, said the company’s listing date depends on when it receives the green light from the YSX and the readiness of the exchange’s infrastructure, including the trading systems at securities companies.

Sources at a number of the future underwriters said at the exchange launch they still need to open offices, hire staff and install the necessary software.

FMI is looking forward to watching the securities companies develop their businesses, said U Tun Tun, and is willing to work with anyone who is competent.

“We believe we already meet all the listing criteria though we are working with the YSX to answer additional questions about our business operations,” he said.

“FMI already operates to an international standard, so we welcome more professionalism in the market,” he said, adding that the YSX is reviewing the company’s prospectus.

The company currently has at least 6800 shareholders, and has no plans to issue new shares at the inception of trading at the YSX, he said. “FMI’s listing will allow our shareholders to buy and sell shares more efficiently in the future.”

FMI is owned by business mogul U Serge Pun, whose real-estate-focused company Yoma Strategic is the only Myanmar conglomerate to successfully list overseas, trading on the Singapore Exchange.

Daw Swe Swe Myint, general manager of Myanmar Citizens Bank, said the lender is likely to hire Myanma Economic Bank and Daiwa Securities’ joint venture, Myanmar Securities Exchange Centre, as an underwriter.

Daiwa and MEB also co-own the exchange, along with Japan Exchange Group.

Myanmar Citizens Bank is still selling shares to its existing shareholders on an over-the-counter basis, said Daw Swe Swe Myint, adding that the bank hopes to list on the YSX next February or March.

The number of shares on sale depends on a board decision about its target for the bank’s capital-to-assets ratio, to be decided at a meeting early next year, she said. “As we prepare to meet all of the YSX listing criteria, we must put together comprehensive information, to ensure the company is transparent for investors,” she said.

Great Hor Kham Public currently sells over-the-counter shares at K130,000 each, but plans to devalue its shares when it lists on the new exchange, said the company’s external auditor U Zaw Zaw.

“As we will target the listing at all kinds of investors, we must reduce the price, but we want to avoid too much dilution for our existing shareholders.” The company plans to launch its initial public offering, or IPO, next May, he said.

The company is one of the newest of the six to list on the exchange. It was founded in Muse, Shan State, in 2012 and has built public infrastructure in the area. Its paid-up capital is K2.7 billion and the company hopes to raise funds to build hydropower and other projects in the coming years, U Zaw Zaw said.

The company’s accounting standards have been in line with YSX requirements since its inception, though several changes still need to be made to get the corporate governance structure up to scratch, he said.

Great Hor Kham hopes to hire Myanmar Securities Exchange Centre or KBZ Stirling Coleman as an underwriter, or both, depending on costs. Typically, corporations hire a number of underwriters to help them list.

Decision makers at First Private Bank and Myanmar Thilawa SEZ Holdings (MTSH) could not be reached for comment. However, a spokesperson for MTSH’s share information department said the company will begin selling over-the-counter shares again on December 20, after a temporary hiatus. More information about the listing will be available after the company’s second annual meeting on December 18, she said. MTSH’s share price had risen to K50,000 by late November, from K10,000 when trading started last April.

While the exchange has got off to a slow start, officials said at the launch that it will be opened to foreign investors when a new Myanmar Companies Act is passed next year, and that local-foreign joint venture companies are also likely to be eligible to list under the new law.

It is unclear whether overseas investors will be able to buy shares in sectors off-limits to foreigners under Myanmar law, such as jade, gemstones, domestic financial institutions and land.

“The critical thing is to change the law to accept foreign investments,” Takashi Hibino, president and chief executive officer of Daiwa Securities Group, which co-owns the exchange, previously told The Myanmar Times.

“At the moment it’s a purely domestic market – without investment from overseas it will be very difficult to grow.”

Source: Myanmar Times

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