Cambodia’s fledgling stock exchange could receive a much-needed boost after Malaysian-owned power infrastructure provider Pestech Cambodia officially submitted its application for an initial public offering on the CSX, industry insiders said yesterday.

Lamun Soleil, director of market operations at exchange, said Pestech Cambodia’s application was now being reviewed, and its listing was expected in the third quarter of 2018.

“This is a good sign, and shows that [Pestech] has confidence in our market,” Soleil said, adding that he was optimistic that trading activity on the CSX would gain momentum in the upcoming year. “Once there are more companies listed on the exchange, there will be more products for investors to trade, which help the market become more active.”

According to a filing on the Malaysian stock exchange, Pestech hopes to raise as much as $20.3 million through its initial public offering (IPO) on the CSX with an indicative price of $0.70 for 29 million shares, representing up to 29 percent of the company’s value. Eight million of those shares are to be made available to the public, with the rest earmarked for select investors as well as directors, employees and business associates, the filing says. Pestech’s application was submitted to the Securities and Exchange Commission of Cambodia on December 22, it says.

David Van, executive director of Deewee Management, said the Pestech listing could help “reinvigorate the struggling CSX”, not only encouraging growth in the Kingdom’s electricity sector but also contributing to the strengthening of Cambodia’s institutional framework.

“Considering [Pestech Cambodia’s] parent company is already listed in Malaysia, we should expect it to operate within ethical norms and with good governance,” he said.

Stephen Higgins, managing partner of Phnom Penh-based investment firm Mekong Strategic Partners, agreed that more listings on the CSX would help lift the market’s liquidity, “which is a major problem at the moment”.

“It’s not clear to me however that the underlying business model of Pestech is as attractive as other stocks like the ports,” Higgins added.

Pestech says in its filing that it is currently operating with a negative working capital, and intends to use the IPO to finance its extensive projects in the Kingdom.

Earlier last week, the company announced that it had won a $26 million job to begin construction on three new electricity projects in Cambodia, including a new substation in Phnom Penh as well as two substations and a 115kV transmission line in Oddar Meanchey.

Additional Reporting by Robin Spiess