BANGKOK: Thailand’s biggest energy company PTT is examining a proposal to list its retail business and is expected to complete the study in the third quarter of this year, the state-backed company’s investor relations official said. PTT has hired JPMorgan Chase & Co and Phatra Securities to advise on the potential IPO, people familiar with the matter said. The sources declined to be identified as the information was not yet public. Kasikorn Securities, brokerage unit of Kasikornbank, has also been hired as an advisor, a Kasikorn official said.
Last month, PTT invited banks to make pitches and then selected the three to work on the IPO, the people added. PTT’s retail division might be valued between US$2bil and US$3bil, the people said. One of the proposals being considered included bringing in a strategic partner before the likely IPO in 2017, they added. A successful listing would rank among Thailand’s largest IPOs. BTS Group’s US$2.13bil IPO holds the record for Thailand’s biggest.
PTT, like other global energy companies hit by slumping oil prices, is trying to find new ways to fund its capital spending needs. PTT plans to invest 297 billion baht (US$8bil) during 2016-2020, of which 50.8 billion baht is earmarked for this year. It is also catching up with the global trend that has seen a series of oil companies selling their low-margin fuel marketing businesses.
PTT has 1,458 outlets, representing 40% of Thailand’s petrol station market. The company has said it plans to invest 20 billion baht over the next five years to expand its gas service station network to 1,600. The planned IPO would consist of the oil marketing business and PTT-owned Amazon coffee shops at the petrol stations, the official said.
PTT shares extended gains to trade up 2.3% after Reuters first reported that the company was studying doing a possible IPO, while the benchmark Thailand index was up 0.7%. Unlike in Western markets, where non-fuel businesses – convenience stores, fast food operations, and services such as car washing – can account for more than half of a gas station’s profits, the majority of PTT’s profits comes from petrol sales.
