Connect with us

Myanmar

Capital-Hungry Burma Firms Cautiously Drawn to Singapore Listings

Singapore’s nascent role as a magnet for Burma companies eager to grow as their country emerges from decades of isolation but frustrated by its crippled banking system and barely existing financial markets.

Bahar Karaman

Published

on

At Rangoon International Airport, large blue and white signs in the arrival and departure halls promote Singapore’s stock exchange as the go-to destination for Burma businesses seeking capital.

The advertisements underscore Singapore’s nascent role as a magnet for Burma companies eager to grow as their country emerges from decades of isolation but frustrated by its crippled banking system and barely existing financial markets.

Lawyers and financial advisors who work closely with Burma firms say about six to 10 companies are considering a listing in Singapore over the next couple of years.

“Many Myanmar [Burma] business owners admire the reputation of Singapore Inc and look forward to raising their own prestige that comes with a Singapore listing,” said Kim Huat Chia, head of corporate & capital markets at Singapore law firm Rajah & Tann.

But hurdles to successful offerings are high.

Singapore’s bourse says while it has seen interest from Burma companies, they will have to meet its corporate governance standards. For many businesses, that’s still quite a distant goal, lawyers and bankers said.

That’s further complicated by several Burma tycoons being on a US sanctions list, accused of making their fortunes by colluding with the former military junta, which was notorious for corruption and human rights abuses. While the European Union ended sanctions this year, the United States has only suspended them.

The potential for resistance from Burma’s government, which is planning its own stock exchange, has also made some local businesses wary about tapping capital markets offshore

To date, only one Burma firm has managed to list in Singapore—Yoma Strategic Holdings Ltd, which listed in 2006 through a reverse takeover.

The property and car sales conglomerate led by tycoon Serge Pun now counts Capital Group, Aberdeen Asset Management and Vanguard among its top 10 shareholders and has seen its share price quadruple since early 2012 on investor interest in the hot frontier economy.

It’s only natural that other Burma firms would want to follow suit.

“To this day in Myanmar, there’s no stock market, no bond market, no banking market to talk about. There are quite a few companies that are asset-rich but have no source of liquidity,” said Andrew Rickards, chief executive of Yoma.

“If it was smart to do an RTO [reverse takeover] in 2006 for Yoma, it’s absolutely necessary now for companies to have access to international markets.”

But if corporate Burma is drawn by Yoma’s example, it is also wary of what happened to Zaw Zaw, one of Burma’s most powerful businessmen.

Singapore Exchange Ltd effectively rejected in April a proposed reverse takeover deal that would have seen Zaw Zaw inject his petrol kiosk business into bed linen retailer Aussino Group Ltd.

It said it was “unable to proceed with the review of the application as major issues have not been adequately resolved.” Among these concerns, it cited Zaw Zaw’s placement on the US sanctions list and the lack of clarity as to why he was on it. Zaw Zaw could not be reached for comment.

Burma’s corporate landscape is dominated by about 20 large conglomerates, with the biggest ones estimated to employ as many as 30,000 people each.

For those and smaller Burma companies seeking funds, bank loans are often hard to obtain, with urban land usually demanded as collateral and interest rates high, said Aung Thura, CEO of Rangoon-based research and capital markets firm Thura Swiss.

The country does have an over-the-counter bourse, the Myanmar Securities Exchange Center (MSEC), but it has only two listed firms. When the stocks are traded, which is very rarely, payments are normally made in cash.

A few companies have gone public, but not on the MSEC. Instead they sell shares from their offices or even in public places, letting people know by taking a newspaper advertisement or just through word of mouth, Aung Thura said.

While Burma’s government is working to establish a stock exchange by 2015 with the help of Japan’s Daiwa Securities Group, many in Burma business circles worry that the deadline may be pushed back. Still, going offshore may risk incurring the displeasure of the government.

 

The post Capital-Hungry Burma Firms Cautiously Drawn to Singapore Listings appeared first on The Irrawaddy Magazine.

Comments

Cambodia

CLMV’s economic growth crashes to two-decade low due to COVID-19

The COVID-19 crisis has caused the rate of economic growth in the CLMV bloc to be at its lowest in two decades, the CLMV economies could grow at 3.4 percent this year

Avatar

Published

on

The COVID-19 pandemic is having a negative impact on CLMV economies through their dependency on foreign-sourced revenue from tourism and exports says KResearchCenter.

(more…)
Continue Reading

India

Marketing and investment strategies in Myanmar, India

To encourage Thai SME operators to enter the international market, the Office of Small and Medium Enterprises Promotion (OSMEP) aims to urge them to invade Myanmar, Cambodian, Chinese and Indian markets.

National News Bureau of Thailand

Published

on

Marketing and investment strategies in Myanmar, India

BANGKOK, 26 July 2019 (NNT) – To encourage Thai SME operators to enter the international market, the Office of Small and Medium Enterprises Promotion (OSMEP) aims to urge them to invade Myanmar, Cambodian, Chinese and Indian markets.

(more…)
Continue Reading

Cambodia

Thailand pushes CLMVT as the “New Value Chain Hub of Asia”

The Ministry of Commerce, in cooperation with 11 relevant agencies, hosted the CLMVT Forum 2019 with delegates from Cambodia, Laos, Myanmar, Vietnam, and Thailand

National News Bureau of Thailand

Published

on

BANGKOK, 24 June 2019 (NNT) – Thailand’s Prime Minister, Gen. Prayut Chan-o-cha, today attended the opening of the CLMVT Forum 2019, and urged its member countries to push for the development of the CLMVT Regional Value Chain, so that they can have more bargaining power and improve the well-being of their citizens.

(more…)
Continue Reading

Latest

Most Viewed

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 13,609 other subscribers

Trending