Yuanta Securities (Cambodia) has grown to be among the largest investment banks in the Kingdom after starting as a one-man operation in 2006.
Since then, it has grown to comprise a tightly knit group of 11 staff, all of whom are focused on servicing the capital market.
Yuanta managing director Han Kyung Tae told The Post that his firm specialises in offering diverse financial packages for a range of businesses, whether it be nurturing medium-sized enterprises or helping larger firms expand their scope – to perhaps, as in the case of Acleda Bank Plc’s case, securing an initial public offering (IPO).
“Being part of the entire process of building the local capital market and participating in milestone projects is the most rewarding part of my job,” Han said from his office in the capital’s Emerald Building.
There is no doubt that Yuanta has had a crucial role in building the local capital market. The investment bank, under its Taiwanese-South Korean parent firm, holds the distinction of being the oldest investment bank in Cambodia.
It has successfully guided promising start-ups to venture capitalists before they reach the point where Yuanta’s services help them achieve their dreams.
Han said that when evaluating the possibility of an IPO, each company that approached him had varying goals.
Phnom Penh Municipal Water Supply Authority – the first stock traded on the Cambodia Securities Exchange (CSX) in 2012 – “was chosen by the government largely because it was deemed the most transparent and trustworthy, and a good example for following IPOs,” he said.
Han describes the first IPO project as “almost like paving a road in the wilderness. We were deeply involved in putting the proper regulations in place as well as providing public and private education about the capital market and details of its process,” he added.
Since its IPO, Phnom Penh Municipal Water Supply Authority has gone from servicing 195,261 households to 320,900 last year, according to official figures.
“For the three state-owned companies, the government’s decision to go public was in part to contribute to the development of the capital market, to enhance the transparency of the state-owned enterprises and to ensure their future growth,” Han added.
Han motioned to the window overlooking Norodom Boulevard when asked how Cambodia has changed in the 13 years since adopted the Kingdom as his home.
“I remember that 13 years ago the tallest building on this road was only four stories. [Cambodia] has changed a lot since.
“The Cambodian market is still in its infancy. The CSX is one of the youngest stock markets in the world, small in size and liquidity-wise, and in almost every aspect it is very much considered a fledgling market,” he said.
Today, as Acleda prepares to go public, the largest IPO in the market’s history is already three times oversubscribed.
Han noted that the relationship between total market capitalisation and total GDP was “nominal” in Cambodia, whereas it was around 70 per cent in neighbouring Vietnam.
Many developed countries, however, enjoy market capitalisation of more than 100 per cent.
The Acleda IPO is forecast to bring the Kingdom’s market capitalisation to some 10 per cent, according to Han. Currently, the banking sector provides some 97 per cent of capital financing to the economy.
In more developed markets, some 40 per cent of business funding is issued by the banking industry, with around 60 per cent from non-banking sectors, such as capital markets.
However, Cambodia’s economy is almost entirely dominated by bank funding, with Acleda being among the largest.
Han says the upcomimg listing will bring more than just financial rewards.
“[The Acleda IPO] will not only benefit customers, but also shareholders. It will enhance [the bank’s] reputation and contribute to profits.
“The local banking sector is one of the most successful and fastest-growing industries in Cambodia, with high returns for shareholders.
“More importantly, Acleda wants to be a publicly held company owned by the Cambodian people.
“Transparency and corporate governance will be even further enhanced, and it will be regarded by the public as an even more responsible company,” he stressed.