Thailand's big float still on hold

BANGKOK - Thai investors' optimism has been dented after a court decision delayed what would have been the nation's biggest initial public offering.

The Government planned to raise as much as 34.86 billion baht ($1.25 billion) this week selling shares of EGAT, the nation's biggest power producer. However, the Supreme Administrative Court this week delayed the offering to study whether Government decrees on asset sales are legitimate.

Two years after a stock rally in Thailand ground to a halt, investors had been counting on a Government asset sale to jump-start the market.

The EGAT offer has already been delayed since April last year, as workers staged rallies and work stoppages to protest against the sale. Unions argued that foreign ownership could lead to higher power prices.

Prime Minister Thaksin Shinawatra may press ahead with sales of two telephone companies, TOT Corp and CAT Telecom, to show he is committed to reducing the Government's presence in the economy and expanding the stock market, said Lance Depew, a hedge fund manager at Quest Capital in Bangkok.

"It makes economic, structural and political sense for the Government to pursue the privatisation process," said Depew.

Korawut Leenabanchong, another investor, had banked on the sale to help revive interest in Southeast Asia's third-biggest market after Singapore and Malaysia. Thailand's SET Index is down 3.6 per cent this year in US dollar terms, while Morgan Stanley's Asia Pacific Index has advanced 9.3 per cent.

"The EGAT listing is the largest in Thailand ever, and this is a major hurdle that it has to push through," said Korawut, CIO at BOA Asset Management in Bangkok.

After the ruling, Finance Minister Thanong Bidaya vowed to pursue sales of state-owned companies such as TOT, Thailand's biggest fixed-line phone operator, and CAT Telecom, the international phone service monopoly. The proceeds would help finance 1.7 trillion baht of road and rail projects.

EGAT planned to sell a 25 per cent stake on November 16 and 17. Overseas investors would be allowed to buy up to 30 per cent of the stock.

- BLOOMBERG