Cambodia’s domestic market is a difficult place for securities houses to make money. The country offers little in the way of equity underwriting business, while trading volumes remain tepid. But SBI Royal Securities, led by chief executive Shuzo Shikata, has done as much as anyone to push the market forward.
There has not been a single primary equity deal in Cambodia’s market since May 2017, when Sihanoukville Autonomous Port listed with the help of SBI Royal Securities. So, the decision as to which firm should win the award this year was less a question of successful deals and more an issue of who had laid the groundwork for future success.
The trading business, in this context, also took on greater importance.
First, who stands out in trading? Three firms sit at the top of Cambodia’s equities market: Cana Securities, Campu Securities and SBI Royal Securities. Campu Securities, a subsidiary of Public Bank, boasted the biggest volumes in the market during our awards period, but showed little consistency. It managed CR4.725 billion ($1.15 million) of trading in July 2017 – in Cambodia’s tiny secondary market, that is a big deal — but it did not feature in the top five for the next 11 months.
Cana and SBI Royal were much more consistent, regularly finding a place in the top 10 and frequently swapping places with one another as the most active broker in the market. But in June 2018, a particularly volatile month for the domestic market, SBI Royal managed much higher trading volumes, nabbing CR1.8 billion against Cana’s CR250 million. There is no more important time for a broker to show its skills than during a volatile period. SBI Royal arguably edges ahead of its rivals in trading.
More impressive, though, is the work SBI Royal has done to develop the domestic capital markets. The firm has won a sole mandate to work on a Cambodian riel bond for Hattha Kaksekar, a microfinance company.
The deal, set to be worth around $20 million, is undoubtedly small by global standards. It pales in comparison to the $300 million that Cambodian casino operator NagaCorp raised in May, the first time an issuer from the country had ventured into the offshore market. But in the long term, it could be more important.
Hattha Kaksekar will be the first-ever issuer in Cambodia’s domestic bond market, opening up a crucial funding channel for companies in the fast-growing economy. SBI Royal Securities will be the sole bookrunner of the bond, which is due to be priced in the last quarter of 2018.
After a year in which Cambodian securities houses saw more tumbleweed than they did deals, SBI Royal Securities deserves praise for trying to develop the capital markets. If the deal helps galvanize a domestic bond market in Cambodia, even the firm’s rivals could not begrudge it this award.