Osotspa launches Thailand's first major IPO in 2018

It may not be as famous internationally as Red Bull but energy drinks group Osotspa is Thailand's oldest consumer products company and it plans to raise as much as $460 million.

Thailand’s prolonged drought of initial public offerings is set to come to an end after energy drink manufacturer Osotspa launched a Bt13.3 billion to Bt15 billion ($405 million to $460 million) deal on Wednesday.

Osotspa will be the first internationally marketed Thai IPO after Gulf Energy raised $719 million in December last year, wrapping up a year of strong deal flow, particularly from the power sector.

Since then there have been only three small company listings on the main board of Stock Exchange of Thailand (SET).

Osotspa's Reg S-only deal features 506.75 million new shares and 97 million existing shares held by Niti Osathanugrah, a member of the company's founding Osathanugrah family. Altogether, Osotspa will place a 20.1% stake, with the first day of trading set for October 17. 

Founded 127 years ago, Osotspa is Thailand’s oldest consumer products company and is making its way onto the stock market in the face of growing macro headwinds, notably US dollar strength and rising US interest rates, which have undermined investor sentiment across emerging markets.

The good news is that Thailand is one of the better-performing emerging markets. The SET index has rebounded from a sharp plunge in early June and is now down just 3.3% from the beginning of the year, making it the best-performing major stock market index in Southeast Asia.

Osotspa is best known as the producer of M-150, the most popular energy drink in Thailand with a 39% market share last year, according to company marketing materials seen by FinanceAsia. Osotspa generated about 40% of its Bt24.5 billion revenue last year through sales of M-150.

Other beverage products produced by Osotspa include vitamin drinks, sports drinks and ready-to-drink coffee. It recently also doubled its production capacity for C-Vitt, a popular vitamin drink, to 184 million bottles per year in anticipation of stronger demand for health beverages.

In addition, Osotspa makes personal health products under the brands Babimild and Twelve Plus and sells its products in Myanmar, Laos and Cambodia through joint ventures and local partnerships. And it plans to enter China and Vietnam as early as next year.

Whether in time it can emulate the success of Red Bull, an Austrian company with Thai heritage and the world's leading energy drinks maker, or draw the buying interest of other global drinks brands, is something some IPO investors will likely be hoping for. 

Shares in Osotspa are being pitched at between Bt22 and Bt25 each, equating to a price-earnings ratio of 17.2 to 19.6 times earnings last year.

According to a term sheet seen by FinanceAsia, institutional investors will be offered 160.5 million shares and retail investors 146 million shares, while 37.9 million will be issued via a patronage tranche.

The remaining 259.3 million shares will be allocated to 12 cornerstone investors including Aberdeen Asset Management, Templeton Asset Management and AIA.

Bank of America Merrill Lynch and JP Morgan are joint international bookrunners. Bualuang Securities and Phatra Securities are joint domestic bookrunners.

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