Myanmar Investments International Limited, together with two other partners, has filed an application to the Securities and Exchange Commission of Myanmar (SECM) to acquire all of the four types of securities licences for the upcoming Yangon stock exchange (YSX) later this year, the firm said.
The Ministry of Finance in January announced that YSX will start operations in October this year and invited interested parties to submit applications for securities licences. There are four types of licences available: underwriting, securities brokerage, securities dealing and investment advisory. The SECM will vet these applications and determine which applicants will be awarded licences.
MIL said the proposed joint venture is a continuation of the firm’s investment strategy of building capital value over the long term by making investments in a diversified portfolio of Myanmar businesses, and at the same time also fulfils the company’s intention to establish a corporate finance advisory business.
Aung Htun, managing director of Myanmar Investments, said, “There is, and will be for decades to come, significant demand for long term financing in Myanmar. The acute shortfall in the present availability of long term funding means there are many significant business that could come to market seeking equity at attractive prices.
“Similarly because Myanmar citizens have had limited savings and investment opportunities for decades we believe that there is the potential for significant domestic funds to be channelled into the stock market. We and our partners believe that the opportunity to be an active participant in both the investment banking and stock broking business in this environment could prove to be very attractive.”
The firm’s intended joint venture partners are Tun Foundation Bank Ltd (TFB) and Finansia Syrus Securities Pcl (FSS). The joint venture will be called Myanmar TF Securities Ltd (MTFS).
TFB is a local commercial bank aﬃliated to the Myanmar Golden Star Group of companies (MGS) whose businesses range from banking, manufacturing and distribution of beer and soft drinks such as Carlsberg and Pepsi. It also has ownership of the Myanmar Times, hotels and an airline. FSS is a Thai securities company, listed on the Stock Exchange of Thailand, with 36 branches throughout Thailand.
MIL said that given the embryonic banking system in Myanmar there is “significant potential” for the capital market in Myanmar to play an important role in helping finance the country’s infrastructure upgrades as well as assist companies to raise long term expansion capital as they expand capacity.
It is expected that the names of the successful applicants for the securities licences will be announced sometime in April or May.
MIL said while the company’s consortium comprises strong and well known members there can be no assurances that its application will be accepted.
If MTFS is successful in being awarded the four licences then it will need to be capitalised at $15 million before the licences will actually be issued.
MIL said there is no binding agreement between the three parties at this stage, but it is expected that the capital will be contributed by the three joint venture partners at the same price per share – Myanmar Investments will invest $3.75 million for a 25 percent shareholding; TFB will invest $7.65 million for a 51 percent shareholding as it is a requirement that the majority of the applicant’s shares are owned by a Myanmar company or citizen; and FSS will invest $3.6 million for a 24 percent shareholding.