Harrison White
Mengly J. Quach Education PLC, a prominent player in Cambodia’s private education sector, has navigated through challenging market conditions to raise $5,082,770 in its Initial Public Offering (IPO). Despite falling short of its initial target of 19,607,000 shares, the company’s IPO, set to list on the Cambodia Securities Exchange (CSX) on 28 June 2023, managed to attract 2,297 investors making it the second-largest based on the number of participating investors in the history of Cambodia’s stock market.
Established by Neak Oknha Mengly J. Quach in 2005, the education institution holds a reputation for superior education quality, discipline, and services, with a mission to empower the next generation using high-quality learning programs.
Second-largest IPO by investor number in Cambodia’s stock market
It was reported by the underwriter of the IPO RHB Securities that a total of 9,966,127 IPO shares were subscribed at a price of 51 cents (KHR 2,080) during the public subscription which concluded on 9 June 2023. According to the firm despite the economic challenges, the IPO attracted overwhelming public interest. A total of 2297 investors participated, making it the second-largest IPO in Cambodia’s stock market history based on the number of investors.
The company is looking to leverage the IPO’s proceeds for its ambitious expansion plans across Cambodia. Initially, Mengly J. Quach Education sought regulatory approval to release 19,607,000 shares at a price range of $0.40 to $0.60 per share, promising a 6% dividend to IPO investors for the first two years. The pre-allotment share price valued the company between $133.48 million and $200.22 million.
Reflecting on the IPO, the Director of the CSX acknowledged the challenging market conditions, citing the uncertainty of the global economy and the competition from two concurrent large IPOs. Despite these hurdles, the Mengly J. Quach Education’s IPO raised an amount higher than some previous IPOs. The Director expressed optimism that this achievement could pave the way for more public offerings in the future.
IPO overvaluation concerns, not market conditions says investors
However, Stephen Higgins, Founder of Mekong Strategic Capital explained to Cambodia Investment Review that his investment firm – one of the biggest in the market – chose not to participate in the IPO due to overvaluation concerns, not market conditions. “You can’t price an IPO that requires 100% confidence in the growth forecasts, and then put an additional pricing premium on top of that,” Higgins said. Despite this, he indicated that his firm remains interested in both companies and would consider investing at more appropriate valuations in the future.
Read more: CSX forecasts record growth for Cambodia’s capital markets in 2023 While the CSX saw a downturn in Q1 2023, with a drop in total trading value and volume, the exchange remains optimistic about the future. It has set ambitious growth targets for 2023, including doubling daily trading volumes, tripling the number of registered trading accounts, and listing 14 new firms on the exchange. These targets align with the broader mission of the CSX to raise public awareness and stimulate investment opportunities in Cambodia’s evolving capital markets.
