Summary of "Financial Instruments for IR ตอนที่ 1"

This training session focuses on the use and understanding of various financial instruments relevant to Investor Relations (IR) professionals, especially for listed companies. The main goal is to equip IR practitioners with knowledge to better communicate with investors, manage liquidity, and support company fundraising efforts.

Main Financial Strategies and Business Trends Presented:

Classification of Financial Instruments by Purpose:
- Fundraising Instruments: Tools companies use to raise capital, including IPOs, Public Offerings (PO), Private Placements (PP), Overnight Placements, Warrants, and Transferable Subscription Rights (TSR).
- Liquidity Enhancement Instruments: Instruments aimed at increasing stock liquidity and trading volume, thereby improving price discovery and attracting institutional and foreign investors.
- Employee Incentive Instruments: Such as ESOPs (Employee Stock Ownership Plans) and E-Jib, designed to align employees’ interests with the company by offering shares or options.
- Company Stock Buyback: Used when the company believes its stock is undervalued, buying back shares to support price and value, subject to regulatory frameworks to prevent market manipulation.
- Derivative Instruments: Instruments like Derivative Warrants (DW) issued by third parties but linked to the company’s stock performance, which can affect the company indirectly.
Fundraising Methods Explained:
- Private Placement (PP): Selling shares to a limited number of institutional or accredited investors without public filing, faster and less costly.
- Public Offering (PO): Selling shares to the general public, requiring regulatory filings and more extensive documentation, but allowing access to a broader investor base.
- Rights Offering (RO): Offering existing shareholders the right to buy additional shares proportionally, often at a discounted price to protect against market price fluctuations.
- Transferable Subscription Rights (TSR): A unique Thai instrument allowing shareholders to trade their rights to subscribe shares, improving flexibility and capital raising efficiency.
Pricing Mechanism - Book Building:
- Used primarily for PO and PP, where institutional investors bid within a price range to determine the final share price based on demand and supply, excluding retail investors due to complexity.
Investor Base Expansion:
- Importance of diversifying investor types, especially increasing institutional investor participation due to their analytical capabilities and longer investment horizons, which stabilizes stock price and reduces volatility caused by retail investors’ sentiment-driven trading.
- IR professionals should actively engage with institutional investors through roadshows, opportunity days, and direct meetings to build relationships and attract quality investors.
Investor Relations Role:
- IR must understand the financial instruments to effectively communicate with investors and address their concerns.
- IR should gather feedback from shareholders, especially large institutional investors, to guide management decisions on capital raising methods.
- Emphasis on transparency and educating investors about the company’s growth, capital needs, and strategic plans.
Market and Regulatory Considerations:
- Regulatory constraints affect the types of instruments and methods available.
- TSR was developed as a workaround for Thai law limitations on rights trading.
- Stock price adjustments occur after rights offerings to reflect the dilution effect.
Strategic Use of Capital Raising:
- Capital increases for growth and asset acquisition are generally favored by investors.
- Raising capital for debt repayment may be less attractive and requires careful communication.

Step-by-Step Methodology for Fundraising Instruments:

Private Placement (PP):
- Identify target investors (institutional or limited individual investors).
- No need for extensive regulatory filing.
- Quicker process with fewer documents.
- Price negotiation with investors.
Public Offering (PO):
- Prepare detailed documents including prospectus.
- Hire financial advisors and underwriters.
- Conduct book building with institutional investors to set price.
- Offer shares to the general public.
- Longer timeline and higher costs.
Rights Offering (RO):
- Announce proportion and price of rights.
- Rights offered to existing shareholders proportionally.
- Exercise price usually discounted (~30%) to protect against price fluctuation.
- Share price adjusts post-offering to reflect dilution.
- Shareholders may exercise rights or sell them if transferable (TSR).
Transferable Subscription Rights (TSR):
- Issue rights that can be traded on the market.
- Provides flexibility to shareholders who do not wish to exercise rights.
- Helps ensure full capital raising by allowing transfer of rights.

Presenters / Sources:

Mr. Trilak Iamwilaiyaphan — Head of Mission and Capital Markets, Phatra Securities Public Company Limited
Mr. Anuwat Ruamsuk — Assistant Managing Director, Head of Capital Markets, Phatra Securities Public Company Limited

This session provides IR professionals with a comprehensive understanding of financial instruments available for capital raising, liquidity management, and employee incentives.