Shares of meat producer Betagro Pcl (BTG) plunged in their first day of trade in Bangkok, following Thailand’s second-largest initial public offering (IPO) this year and defying a typical increase for large debuts in the country.
BTG shares dropped 2.75 baht or 6.88% to 37.25 at 12.14am. The drop came as the SET index was down 0.12 points to 0.01% to 1,625.61.
The stock finished 9.4% below the initial price offering (IPO) price. They were priced at 40 baht apiece after the meat producer and its major shareholders sold 500 million shares. The IPO raised 20 billion baht (US$532 million), including the exercise of a green-shoe option.
The IPO is Thailand's second-biggest listing of 2022 after Thai Life Insurance's listing in July.
Betagro, which produces meat and pet food, said in October that it would sell up to 25% of shares, raising at least 17.4 billion baht.
Cornerstone investors made up 42% of its base offering, including domestic funds, Krungsri Asset Management and TISCO Asset Management, according to a term sheet.
Foreign investors include Fiera Capital and Eurizon Capital.
Some analysts linked part of the share decline to concern over potential government action on food prices.
"There is uncertainty on whether the government will take action on high pork prices," said M Corp Review analyst Athaporn Arayasantiparb.
Other risks included increasing wheat prices, which are used in pork feed production, he added.
Companies that raised at least $100 million through IPOs in Bangkok over the past five years rose by an average of 14% in their initial session, excluding Betagro’s performance, according to data compiled by Bloomberg.
“Betagro is Thailand’s second-biggest meat producer after CP Foods. Its price-to-earnings ratio is close to that of CP Foods,” Ploenjai Jirajarus, an analyst at Capital Nomura Securities Pcl, said in a report. “But we prefer CP Foods, which has a much higher revenue contribution from the overseas operations than that of Betagro.”
After the company’s public debut, members of the Taepaisitphongse family own a stake worth more than $1.1 billion, according to Bloomberg calculations based on the information disclosed on the Stock Exchange of Thailand (SET).
Betagro is raising funds to expand its farms and animal feed production in Thailand and neighboring countries, according to its regulatory filing. About 182 million shares, or 42% of the total offering, were subscribed by local and overseas cornerstone investors including Caas Capital Master Fund, Magna Umbrella Fund and Ghisallo Master Fund, the filing showed.
Kiatnakin Phatra Securities Pcl and Bualuang Securities Pcl are the lead arrangers for local investors; Bank of America Corp is the lead manager for the international offering, according to the filing.
