COMMENT: Delayed Egat listing would hit confidence

Published on November 12, 2005

If Egat Plc’s listing is delayed, it will send a shock wave through the Stock Exchange of Thailand (SET), at least in the short term, fund managers said yesterday. The Supreme Administrative Court is scheduled to rule on a challenge to the listing on Tuesday, one day ahead of the planned subscription launch.

Natthawut Khemayotin, managing director of Globlex Holding Management, said at a seminar yesterday that a stalled listing would hit foreign investors’ confidence in the market.

“It would definitely worry foreigners. They would not understand why it should be delayed after the long planning period,” he said, adding that legal challenges should have been filed long before the planned IPO launch.

Maris Tarab, managing director of ING Funds (Thailand), agreed, saying the delay would result in a short-term effect on foreigners’ confidence.

“The impact would be considerable, even though all understand that it is a legal problem, not something to do with the company’s management or fundamentals,” he said.

Since Egat was transformed into a public company in June, it has been tipped as a main driver to bolster the sagging Thai stock exchange. Jittery nerves regarding Egat’s listing future were cited as a reason behind the 3.99-point or 0.6-per-cent drop in the SET index yesterday. The SET closed at 690.45 points.

On Tuesday 11 civic groups petitioned the Supreme Administrative Court, demanding that Egat’s IPO be halted on the grounds that Prime Minister Thaksin Shinawatra and Energy Minister Viset Choopiban had failed to protect the national interest by going ahead with privatisation.

Viset is scheduled to testify before the court on Monday, and a judgement is expected the following day. A ruling against the IPO would therefore be delivered just one day before the planned subscription scheduled for Wednesday and Thursday.

Viset said yesterday that he would tell the court that Egat’s privatisation was in line with the Corporatisation Law and would benefit the country’s power production.

He added that consumers would not be negatively affected because a government regulatory body would be established to oversee power prices, services and competition. Parliament will screen candidates for that regulatory body before Egat’s shares start trading on November 30, he said.

“It’s now clear that in the first three years after the listing the base power rates will remain unchanged and only fuel tariffs will change in line with fuel bills,” he said.

He also said the court proceeding would not affect investor confidence, because Egat had not yet listed and no judgement had been handed down.

The civic groups opposing privatisation plan a demonstration on Friday at Sanam Luang.

Also yesterday about 300 representatives submitted a petition to the Stock Exchange of Thailand, urging the IPO be frozen and threatening social mobilisation if the court ruled against them on Tuesday.

SET president Kittiratt Na Ranong said the listing could not be delayed if Egat strictly followed the share-divestiture process. “Egat can be listed if all the processes are completed, especially if the court rules against the petition,” he said.

He added that the exchange had already written to Egat assuring it that it was eligible to list.

Business Reporters

The Nation

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