TLI fails to live up to its hype, continued negative sentiments may have an impact on upcoming IPOs

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Shares of Thai Life Insurance Plc (TLI), which was the most sought-after shares when it went on sale on June 29th, ended the day down below the initial public offering (IPO) price of 16 Baht a share on its debut on the Stock Exchange of Thailand (SET), leaving a bad taste for investors and possibly a painful experience for more IPOs that are in the pipeline.

Shares of TLI ended the day as the most actively traded shares with more than 10 billion Baht worth of shares traded, accounting for nearly 18% of the total trade on the Stock Exchange of Thailand (SET). TLI’s shares ended the day at 15.90 Bath a share down 0.10 Baht from the IPO price with 10.25 billion Baht worth of shares traded. The entire SET’s trading stood at just 57.5 billion Baht yesterday.

Shares of TLI, which were snapped up within an hour of its IPO, started its debut on the SET down 0.10 Baht and ended at the same price as it started but hit an intraday high of just 16.30 Baht a share.

TLI therefore joined many of the stocks that failed to live up to the hype and investors looking for long term investment could wait a while to scoop the shares at a later date as the market’s outlook does not look promising enough to help push the shares higher.

Despite the possible upside, history of IPOs in the past few months shows that most IPOs have not performed as well as people expect them to.

Performance of IPO from January to July 2022

As Thai Enquirer had reported on Friday (Click here ) not many IPOs have managed to perform very well.

Some of the bigger names over the past 27 months though have performed a little better than the list above which are companies listed in 2022. The list below is the performance of IPOs since March 2020 on their IPO day and their current price and returns since IPO.

IPO Performance since March 2020 until July 2022

Sour Taste

The not so stellar performance of TLI is likely to have an impact on the upcoming IPOs in the market, analysts say.

There are some big IPOs that are in the pipeline especially the petrochemical unit of Siam Cement Plc (SCC), which has filed its intentions with the Securities & Exchange Commission (SEC) to list on the SET.

Here is the list of IPOs that are slated to enter the stock market

Link – https://classic.set.or.th/en/company/ipo/upcoming_ipo_set.html

“The negative market sentiments pertaining to the incoming recession, the rising inflation, the declining global equity markets and rising rates are all going to take a toll on offering in the pipeline,” an analyst said.

The lack of performance by TLI, an offering that sold like hot cakes, failed to perform and this could spook investors who have already started to remain sidelined.

The dwindling trading volumes/value is a clear indication that investors continue to be cautious in equity markets.

Digital Transformation

TLI’s offering price was at 16 Baht a share with as many as 2.32 billion shares being offered including a green-shoe option. The offering raised 37.10 billion Baht, one of the highest in recent times.

TLI raised funds by offering a mere 39.4% new shares while 60.50% of the shares were sold by existing shareholder and a green-show option of 7.5%. The largest insurer in Thailand had managed to get cornerstone investors included Thailand Government Pension Fund, Oaktree Capital, Segantii, Ghisallo Capital, Singapore’s GIC Private Limited Fund and Catalyst Funds Management.

This is the 2nd largest IPO in Thailand since the Ngern Tid Lor Plc that was undertaken May 2021 which also had raised more than US$1 billion in IPO.

TLI has said that the insurer said it will spend 13.6 billion Baht from new share sales for digital transformation, online distribution channel and other investments to maintain its leading position in the country’s insurance market.

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