SGX rejects Myanmar tycoon's backdoor listing attempt
A bid by one of Myanmar's tycoons to tap foreign capital through a backdoor listing in Singapore has been rejected by the Singapore Exchange. The SGX has cited the tycoon, U Zaw Zaw, being on the US sanctions list as reason for rejecting the $70-million reverse takeover deal.
SINGAPORE: A bid by one of Myanmar's tycoons to tap foreign capital through a backdoor listing in Singapore has been rejected by the Singapore Exchange.
The SGX has cited the tycoon, U Zaw Zaw, being on the US sanctions list as reason for rejecting the $70-million reverse takeover deal.
Despite its failure, experts say this will not dampen the spirit of other Myanmar companies from looking to raise capital in foreign markets.
The businessman had planned to inject his petrol station business into Singapore-listed bedlinen company Aussino.
In the reverse takeover deal, Aussino were to issue new shares to buy the energy business of the Max Myanmar Group, headed by U Zaw Zaw.
If the transaction had been successful, Aussino will be running petrol stations in Myanmar.
For the tycoon, gaining control of a listed company would give him access to Singapore's capital markets to raise capital.
SGX quashed the application on Monday, saying that "major issues have not been adequately resolved."
The exchange also cited concerns over the company's links to human rights violations among others.
The tycoon's related companies had also been alleged to be involved in human rights violations in connection with forced land acquisition by the former Myanmar government, as well as investigations by the country's tax authorities, SGX said.
Still, the major concern is over U Zaw Zaw being on the US sanctions list for his ties with former Myanmar military leader Than Shwe.
Hans W Vriens, managing partner at Vriens & Partners, said: “This list is dynamic. Around 100 Myanmar businessmen are currently on the list, and quite a few are very busy trying to get off the list. Zaw Zaw, unfortunately for him, is the poster child for crony businessmen, or the ultimate crony businessman in Myanmar. But he's clearly trying to change as well. And the fact that he was trying to get his listing in Singapore and launch a major PR campaign in Singapore shows you, if he wants to grow his business, he needs access to capital and needs to become somehow respectable.”
Aussino shares fell about 40 percent on news of SGX's refusal to review the planned merger.
However, analysts say, despite the failed bid, this has set a precedent for outbound Myanmar companies looking to raise capital in a market with limited options.
Rahul Ghosh, head of Asia research at Business Monitor International, said: “It's very difficult for Myanmar companies to raise financing at present. There is no stock market - there are plans for one in 2015, but even then, volume is likely to be low. And there is no corporate bond market either. So this is certainly a blueprint that others will look to follow. However, we expect other companies to come across similar challenges.”
Despite political and economic liberalisation, experts say the corporate landscape continues to be fraught by poor information flow, questionable corporate governance and accounting standards.
Aussino shares fell as low as 7.1 cents intra-day but it clawed back part of its losses to close at 10 cents.
- CNA/xq
A bid by one of Myanmar's tycoons to tap foreign capital through a backdoor listing in Singapore has been rejected by the Singapore Exchange. The SGX has cited the tycoon, U Zaw Zaw, being on the US sanctions list as reason for rejecting the $70-million reverse takeover deal.
SINGAPORE: A bid by one of Myanmar's tycoons to tap foreign capital through a backdoor listing in Singapore has been rejected by the Singapore Exchange.
The SGX has cited the tycoon, U Zaw Zaw, being on the US sanctions list as reason for rejecting the $70-million reverse takeover deal.
Despite its failure, experts say this will not dampen the spirit of other Myanmar companies from looking to raise capital in foreign markets.
The businessman had planned to inject his petrol station business into Singapore-listed bedlinen company Aussino.
In the reverse takeover deal, Aussino were to issue new shares to buy the energy business of the Max Myanmar Group, headed by U Zaw Zaw.
If the transaction had been successful, Aussino will be running petrol stations in Myanmar.
For the tycoon, gaining control of a listed company would give him access to Singapore's capital markets to raise capital.
SGX quashed the application on Monday, saying that "major issues have not been adequately resolved."
The exchange also cited concerns over the company's links to human rights violations among others.
The tycoon's related companies had also been alleged to be involved in human rights violations in connection with forced land acquisition by the former Myanmar government, as well as investigations by the country's tax authorities, SGX said.
Still, the major concern is over U Zaw Zaw being on the US sanctions list for his ties with former Myanmar military leader Than Shwe.
Hans W Vriens, managing partner at Vriens & Partners, said: “This list is dynamic. Around 100 Myanmar businessmen are currently on the list, and quite a few are very busy trying to get off the list. Zaw Zaw, unfortunately for him, is the poster child for crony businessmen, or the ultimate crony businessman in Myanmar. But he's clearly trying to change as well. And the fact that he was trying to get his listing in Singapore and launch a major PR campaign in Singapore shows you, if he wants to grow his business, he needs access to capital and needs to become somehow respectable.”
Aussino shares fell about 40 percent on news of SGX's refusal to review the planned merger.
However, analysts say, despite the failed bid, this has set a precedent for outbound Myanmar companies looking to raise capital in a market with limited options.
Rahul Ghosh, head of Asia research at Business Monitor International, said: “It's very difficult for Myanmar companies to raise financing at present. There is no stock market - there are plans for one in 2015, but even then, volume is likely to be low. And there is no corporate bond market either. So this is certainly a blueprint that others will look to follow. However, we expect other companies to come across similar challenges.”
Despite political and economic liberalisation, experts say the corporate landscape continues to be fraught by poor information flow, questionable corporate governance and accounting standards.
Aussino shares fell as low as 7.1 cents intra-day but it clawed back part of its losses to close at 10 cents.
- CNA/xq