Thai PTTEP offers near 13 percent discount for $3.1 billion share offer

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Thailand’s top oil and gas explorer PTT Exploration and Production Pcl PTTE.BK is offering new shares at a discount of as much as 12.6 percent for its planned up to $3.1 billion equity offering, as it raises funds for expansion and to pay for the purchase of UK-based Cove Energy.

The Thai state-owned company’s equity raising is Thailand’s biggest ever, and underscores a boom in equity capital market deals in Southeast Asia’s rapidly growing economies.

PTT Exploration and Production (PTTEP) is offering 650 million shares in a range of 135-145 baht each, according to a term sheet of the deal seen by Reuters on Thursday. That represents a discount of 6.1-12.6 percent to Wednesday’s close. The stock was down 1 percent in early Thursday deals.

Current shareholders have priority to participate in the offer ahead of other investors. Thailand’s top energy firm PTT Pcl PTT.BK, which owns 65.3 percent of PTTEP, is fully supporting the fund raising.

At the top of the range, the offer would raise 94.25 billion baht ($3.1 billion), surpassing a previous record of $1.6 billion set in 1999 by Siam Commercial Bank Pcl, according to Thomson Reuters data.

Southeast Asia nations have hosted some of the biggest IPOs in Asia-Pacific this year, including a $3.1 billion deal from Malaysia’s Felda Global (FGVH.KL) and a $2.1 billion IHH Healthcare Bhd (IHHH.KL) IPO. That boom has helped investment banks to weather a downturn in Hong Kong, Shanghai and other larger markets.

PTTEP will use the proceeds to part-fund the recently completed $2.2 billion acquisition of Cove Energy PLC and other expansion costs.

The explorer plans to invest $12 billion over the next five years to boost its reserves.

PTTEP had initially planned to offer the shares to all comers, but after a backlash said it would give priority to existing shareholders in an attempt to get backing for the fund raising.

Bank of America Merrill Lynch (BAC.N), Deutsche Bank (DBKGn.DE), Finansa FNS.BK, Goldman Sachs (GS.N), JPMorgan (JPM.N), Phatra Securities, Tisco and UBS (UBSN.VX) are the joint global coordinators on the deal.