Corporations or governments that make the decision to sell ownership in their company through an initial public offering generally engage the services of an investment bank to assist in structuring the transaction and to raise capital.

Investment banks differ from commercial banks in that commercial banks take deposits from customers and use these deposits to provide financing to individuals and corporations through loans.

Investment banks assist corporations and governments in raising capital by underwriting the issuance of securities.

The services of investment banks include the promotion and trading of securities, known as the “sell-side” and distribution to individuals and institutions, known as the “buy-side”.

The investment bank will work with the company in deciding the amount of financing required, percentage of the company to be sold, the type of security to be offered, the offering price, and may assist with the filing and registration with the relevant exchange and regulatory body.

Once this is achieved the company or government issuing the securities, the issuer, appoints an investment bank to underwrite the offering.

Underwriting is the process whereby an investment bank bears the risk of being able to sell the securities and the cost of holding them on its books, until they are sold.

The most common form of the underwriting of securities is a firm commitment, also known as a bought deal. In this scenario the investment bank will buy the new securities for an agreed price and resell to the public at a mark-up.

The company issuing the securities is guaranteed the funds whether the underwriter is able to sell the securities or not.

For larger issues, a syndicate of underwriters may be formed involving several investment banks who share joint responsibility at an agreed ratio.  This is known as a syndicate underwriting. In this case a syndicate manager selects members, determines the allotment of shares for each member, and manages the overall process.

The members may further have selling groups, consisting of other investment banks and broker-dealers. The underwriters sell the securities at a higher price than the issuer receives.

This mark-up is known as an underwriting spread and is usually divided into a management fee for the syndicate manager and an underwriting allowance for the members of the syndicate, who can further compensate the selling group with a selling concession.

Another form of underwriting is a best-efforts underwriting.

This usually occurs for issues which may be considered risky or difficult to sell.

In this case the investment bank will not will not guarantee the sales of securities and the company bears the risk if the full issue is not sold, which would result in less monies being received.

Underwriters play a critical role in bringing securities to the market which involves a web of players before the securities are purchased by the end investor – a role with significant risk and compensation.

Read more here:
Talking Finance: Underwriters bear risk

CEDAC’s enterprise manager Lang Seng Haung said the organisation is set to ink a deal tomorrow with Kampong Speu Palm Sugar Improving Farmer Association to buy 15 tonnes of palm sugar each year.  The price would be set at around US$1,000 per tonne. “We hope that CEDAC will get palm sugar products of high quality that can be exported into the international markets,” he said.

Kampong Speu palm sugar was granted GI status last year, under a World Trade Organisation  agreement. It brands products based on the areas for which they are famous, such as champagne from France and Cambodia’s Kampot pepper.

Sam Saroeun, president of Cambodian Sugar Association in Kampong Speu, said that the organisation had already inked a new contract this year to sell 10 tonnes of sugar to a company called Development & Appropriate Technology. He added that the association has 172 producers in Samraong Tong and Odong districts.Read the original article here:

Kampong Speu sugar in new deal

The world’s economic downturn had hit the Kingdom particularly hard, while restricting access to credit for American firms planning to expand abroad, he said on Monday.

“We were starting to see an increase of potential US investors when the crisis hit. Some took their plans and their ideas and sort of kept them on the shelf for the moment,” he said.

“With the global economic recession diminishing, I think more and more businesses are looking for expansion, and I think there are great opportunities here in Cambodia.”

Spinelli is touring Southeast Asia in advance of a May conference in Jakarta aimed at promoting the OPIC to potential investors, both American and international.

OPIC – which is a United States government agency – provides longer-term financing for American investors locating in emerging markets, particularly when the projects cannot receive financing through traditional lenders such as the banks.

It also provides long-term risk insurance.

OPIC claims to have a current portfolio totalling US$13 billion. It can operate in 155 countries worldwide with exceptions such as developed countries and North Korea, Cuba and China – from which Congress had barred it from operating to voice its displeasure with the handling of the Tiananmen Square protests in 1989.

The US has been increasingly targeting Asia since the election of Barack Obama as US President, he said, adding that in the prior four to eight years “I don’t think Asia was regarded as much of a priority for the US government”.

OPIC currently does not yet  finance an investment in Cambodia, but is in talks with several US companies regarding ventures in the Kingdom’s tourism, infrastructure, energy, and financial services sector, he claimed, but declined to provide a timeline.

Spinelli said OPIC is required to follow stringent regulations government concerns such as environment, labour law, and the extraction industry, but downplayed concerns following these rules gave US business a disadvantage compared with other economies.

“In the longer term, I don’t think it does put us at a competitive disadvantage, because it is the right thing to do,” he said.

Spinelli met with officials from the government and the American Chamber of Commerce during his Phnom Penh visit, partly to introduce the OPIC and encourage attendance at the conference.Read the original article here:

US investment poised to increase

Claiming its best result returned 42 grams of gold per tonne, the company said the Kratie North site was a key focus of its exploration programme, launched in February.

“A drill programme will commence in mid-April, initially for 2,000 metres of diamond drilling to test and observe the mineralised structures from the geophysics and geochemistry,” it said in a release on the Australian Stock Exchange.

It said it would follow up further results with more precise drilling.

The firm’s stock price climbed 7.14 percent in ASX trading today, ending the day at A$0.375 (US$0.378).

Meanwhile, Canadian exploration firm Shamika2Gold claimed to have acquired 85 percent of MIG International Mining Group on Tuesday.

It said MIG owns a gold and ruby exploration licence in Samlout district, Battambang province.

OZ Minerals Ltd, which is actively exploring in Cambodia, today agreed to buy Australia’s Carrapateena copper project for US$250 million in cash.

Read the original article here:
Golden prospects

According to figures released by the Ministry of Land Management, Urban Planning and Construction yesterday, it approved 190 construction projects in the first month of 2011, worth an estimated US$112 million.

This compared to the 204 construction projects worth $84 million approved in January of 2010 — an increase in value of around 33 percent.

“If we look to January last year, it was quiet. This [rise] is because of the ministry’s efforts to pave the way for investors, by making it easier to do business in the construction sector in Cambodia,” said Lao Tip Seiha, director of the construction department at the Ministry.

So far this year, he has seen investors plan large developments such as garment and cassava processing factories and rice mills. Tile factories and housing developments from a company called Borey in Phnom Penh were also tabled.

“We are very happy to see the value of construction increase. We saw that construction sector is recovering [so far] this year,” he said, highlighting that increased project worth was due to the large size of potential builds.

Daniel Parkes, Country Manager of real estate company CB Richard Ellis (Cambodia), said he was optimistic on the future of the sector yesterday, stating that he expected investment to increase both this year and continue to grow next year.

Read the original article here:

Building projects on rise this year

The Ministry of Commerce reported yesterday that rubber exports fell last year to around 30,039 tonnes, down from 35,482 tonnes in 2009.

But Ly Phalla, director general of the General Directorate of Rubber, told The Post that the figure reported did not tally with his estimates. He believes that between 45,000 and 50,000 tonnes of the lucrative crop have been transported to international markets – based on the 39,000 hectares of rubber trees harvested in the Kingdom last year each producing about 1.2 tonnes per hectare.

“We think that falling rubber exports were due to cross-border smuggling, because there are some small border entrances at which there are no authorities stationed in order to record export figures,” he said.

The Directorate expects production to increase in 2011 as more trees mature, but warned that poor management and a higher tax rate could affect exports.

Ly Phalla highlighted the government’s new rubber export tax, ratified by Hun Sen in December.

The tax had previously sat at $50 per tonne, regardless as to the value of rubber, but the highest-value rubber is now taxed at $300 per tonne.

“In 2011 rubber exports could slow down, if the authorities do not strictly control the border entrances,” he said.

Kun Nhem, deputy director of the General Department of Customs and Excise, said yesterday the customs unit was strengthening management over exported goods, especially rubber.

He said that in order to implement this policy more effectively, the general department of custom and excise would ensure rubber exports are only made through the Trapaing Phlong border in Kampong Cham province to ease tax collection.

“We don’t know whether rubber is smuggled because recently we are strictly implementing our measures,” he said. One rubber producer, while supporting efforts to control rubber exports, also said that some yields had been lower than expected.

Deputy director of Sopheak Nika Investment Group, Men Sopheak, said that some younger rubber trees produced between 600 to 700 kilograms of rubber per hectare.

“I think the government should take action to effectively control rubber exports.

“Prevention of smuggling can help the rubber industry in the future,” he added.

The price of rubber on international markets has soared this year. Yesterday, the July-delivery contract gained as much as 2.1 percent to 501.3 yen a kilogram (US$6,090 a tonne) before trading at 499.3 yen on the Tokyo Commodity Exchange as of 11:57 a.m.

The physical price of natural rubber in Thailand extended gains to an all-time high of 185.80 baht (US$6.06) per kilogram on concern over supply shortages in Thailand and Malaysia.

ADDITIONAL REPORTING

The International Monetary Fund has claimed the oversight responsibilities of Cambodia’s central bank “clearly outstrips its capacity and resources” and believes it should consider a temporary halt on licensing new banks.

Human resources, crisis management and enforcement were marked as concerns for the National Bank of Cambodia (NBC) in the IMF report, which called Cambodia’s financial system “relatively shallow”.

“[IMF] staff strongly recommended that a moratorium on new bank licensing be formally placed as long as supervisory capacity and resources are inadequate,” today’s 2010 Country Report stated.

“Robust financial sector oversight is a precondition for a more resilient financial system that would enable Cambodia to meet its economic potential.”

New NBC director general Nguon Sokha said today that there was an ongoing effort to strengthen the central bank, adding it would take a better approach to licensing rather than considering a freeze.

“We need to strengthen the competition in the banking sector,” she said.

The NBC was addressing its constraints through measures such as adding more staff and improving its approach.

Internal changes to improve the effectiveness of its Banking Supervision Department had been made, she said, and the bank was working with the IMF on training.

Representatives from the banking sector remained supportive of the NBC today, but raised some sector concerns.

Canadia Bank vice president Dieter Billmeier said he felt the NBC generally did well in terms of oversight.

“As far as we are concerned, so far so good,” he said today.

But with more than 30 banks operating in the Kingdom, he said a lack of human resources was a concern for both public and private industry players.

One suggestion to alleviate the problem was to make the definition of a financial year more flexible, he said.

Currently, the financial year for banks and companies must coincide with the calendar year, meaning oversight bodies as well as independent overseers are annually overworked for a short period.

Billmeier said a more flexible definition for the end of the year – such as allowing the end of a financial year to coincide with the end of a quarter – would help to alleviate this.

Kookmin Bank Cambodia chief executive officer Jang Ki-sung said that tightening the criteria for a banking licence would also strengthen the players in the sector.

The NBC had also taken policy positions to improve the sector as of late, such as tripling the minimum amount of registered capital for banks to 150 billion riel, or US$37.07 million, at the end of 2010.

As a result, Angkor Capital Bank shareholders changed the firm from a commercial to a specialised bank.

“I think they [the NBC] were going the right way,” said Jang Ki-sung today.

The IMF added in its report that five banks constituted nearly 80 percent of total credit in Cambodia.

The economic recovery was an opportunity to clean up bank balance sheets and reduce vulnerabilities while maintaining sector confidence, it said.

Meanwhile, the IMF projected GDP growth for 2010 would be 6.8 percent, and 6.5 percent in 2012.

“Cambodia was hit harder than comparator countries by the global recession, given vulnerabilities that are in part a legacy of a generation lost by civil strife,” it said.

Read the original article here:
IMF hits out at banking oversight

COFCO is the largest leading firm in the businesses of biofuel and biochemical production, oilseed processing, rice trading and processing for exports, brewing materials production, and wheat processing, and real estate business in Beijing, China.

In October of 2010, China signed a rice inspection and quarantine cooperation agreement with Cambodia, which is easier for Chinese investors to export rice from Cambodia.

Secretary General of the Ministry of Finance, Vongsey Vissoth, was quoted by the Xinhua as saying that Cambodia has produced 7.3 million tones of rice paddy in 2010, of which the surpass quantity is 3.5 million tones of rice paddy or 2.1 million tones of processed rice that is available for exports.

“Cambodia has potentials in tourism and the extent of the economy is bigger, it is estimated that Cambodia needs up to 40, 000 rooms by 2015 as the number of foreign tourists is expected around 3.7 million at that year,” Tith Chantha, director general of the Ministry of Tourism, was quoted by the Xinhua as saying.

He also added that Cambodia has 438 hotels with 24,239 rooms, accommodating around 2.1 million foreign tourists last year.

The Vietnamese supermarket will open on December 29, located on 3,300 square meters, along Monivong Blvd in Phnom Penh. The supermarket will sell only Vietnamese products for Vietnamese companies. All goods prices are set already by companies. Payment would be conducted through Agribank, BIDC bank and Sacombank.

“The Vietnam Supermarket will meet demand of oversea Vietnamese living in Cambodia and the rising number of Cambodians who have loved Vietnamese goods, Seng Meng, the supermarket chairman and the association deputy chairman, was quoted by Saigon news.

The Z38 Company has planned to open another three Vietnam Supermarkets in other Cambodian provinces including the famous tourist destination Siem Reap.

She added that “some banned agricultural chemicals are still in use amongst Cambodian farmers. We also see some chemicals used as food additives.”

Chan Sarun, Agriculture Minister, told a meeting of government and development officials on July 14, that “the ministry is considering convention membership because we want to prevent other countries from using Cambodia as a trash bin for their hazardous chemicals and pesticides,” reported VOA Khmer.

Seang Huy said some banned chemicals like some insecticides are still in use in Cambodia, even though the country has banned more than 100 of them.

However, she acknowledged that the use of natural insecticides was harder for farmers, who are under pressure to meet market demands for low-cost goods.

The Rotterdam Convention requires proper labeling and instructions from countries of origin for chemicals, as well as disclosures on restrictions or bans of the chemicals. Both Thailand and Vietnam are among the 134 parties to the convention.