Capital

Credit: Reuters/Damir Sagolj

1 of 2. A man walks past an advertisement board after landing at the airport in Yangon October 29, 2013.

The advertisements underscore Singapore's nascent role as a magnet for Myanmar companies eager to grow as their country emerges from decades of isolation but frustrated by its crippled banking system and barely existing financial markets.

Lawyers and financial advisors who work closely with Myanmar firms say about six to 10 companies are considering a listing in Singapore over the next couple of years.

'Many Myanmar business owners admire the reputation of Singapore Inc and look forward to raising their own prestige that comes with a Singapore listing,' said Kim Huat Chia, head of corporate & capital markets at Singapore law firm Rajah & Tann.

But hurdles to successful offerings are high.

Singapore's bourse says while it has seen interest from Myanmar companies, they will have to meet its corporate governance standards. For many businesses, that's still quite a distant goal, lawyers and bankers said.

That's further complicated by several Myanmar tycoons being on a U.S. sanction list, accused of making their fortunes by colluding with the former military junta, which was notorious for corruption and human rights abuses. While the European Union ended sanctions this year, the United States has only suspended them.

The potential for resistance from Myanmar's government, which is planning its own stock exchange, has also made some local businesses wary about tapping capital markets offshore.

YOMA AND ZAW ZAW

To date, only one Myanmar firm has managed to list in Singapore - Yoma Strategic Holdings Ltd (YOMA.SI), which listed in 2006 through a reverse takeover.

The property and car sales conglomerate led by tycoon Serge Pun now counts Capital Group, Aberdeen Asset Management and Vanguard among its top 10 shareholders and has seen its share price quadruple since early 2012 on investor interest in the hot frontier economy.

It's only natural that other Myanmar firms would want to follow suit.

'To this day in Myanmar, there's no stock market, no bond market, no banking market to talk about. There are quite a few companies that are asset-rich but have no source of liquidity,' said Andrew Rickards, chief executive of Yoma.

'If it was smart to do an RTO (reverse takeover) in 2006 for Yoma, it's absolutely necessary now for companies to have access to international markets.'

But if corporate Myanmar is drawn by Yoma's example, it is also wary of what happened to Zaw Zaw, one of Myanmar's most powerful businessmen.

Singapore Exchange Ltd (SGXL.SI) effectively rejected in April a proposed reverse takeover deal that would have seen Zaw Zaw inject his petrol kiosk business into bed linen retailer Aussino Group Ltd (AUSN.SI).

It said it was 'unable to proceed with the review of the application as major issues have not been adequately resolved.' Among these concerns, it cited Zaw Zaw's placement on the U.S. sanction list and the lack of clarity as to why he was on it. Zaw Zaw could not be reached for comment.

CAPITAL DROUGHT

Myanmar's corporate landscape is dominated by about 20 large conglomerates, with the biggest ones estimated to employ as many as 30,000 people each.

For those and smaller Myanmar companies seeking funds, bank loans are often hard to obtain, with urban land usually demanded as collateral and interest rates high, said Aung Thura, CEO of Yangon-based research and capital markets firm Thura Swiss.

The country does have an over-the-counter bourse, the Myanmar Securities Exchange Center (MSEC), but it has only two listed firms. When the stocks are traded, which is very rarely, payments are normally made in cash.

A few companies have gone public, but not on the MSEC. Instead they sell shares from their offices or even in public places, letting people know by taking a newspaper advertisement or just through word of mouth, Aung Thura said.

While Myanmar's government is working to establish a stock exchange by 2015 with the help of Japan's Daiwa Securities Group (8601.T), many in Myanmar business circles worry that the deadline may be pushed back. Still, going offshore may risk incurring the displeasure of the government.

A senior executive at a Myanmar resources firm said several companies have been informally warned by authorities not to list in other markets such as Singapore. Myanmar officials have denied issuing such warnings.

'We haven't protested against any company concerning this and nor have we received any confirmed information about Myanmar companies planning to be listed in Singapore,' said Aung Naing Oo, director general of the Directorate of Investment and Company Administration, part of the Ministry of National Planning and Economic Development.

COY

For now, most Myanmar firms are reluctant to be too forthcoming about fund raising plans, preferring to keep their options open, which may also include partnering with a strategic or private equity investor.

City Mart Holding Co Ltd, which runs Myanmar's biggest supermarket chain, is considering a Singapore listing, but it is also weighing other alternatives, a company spokeswoman said.

Aung Zaw Naing, managing director of construction and hydropower conglomerate Shwe Taung Group of Companies, says his company's plan 'depends on the situation of the stock market that will emerge here soon.'

For investors keen on Myanmar's story, some of the first listings are likely to be Myanmar-focused firms that are part of an international group.

Mongolia-based Silk Road Finance is considering a Singapore listing within three years for Mandalay Capital, a unit that provides corporate and advisory services to Myanmar firms and international investors, its chairman Alisher Ali told Reuters.

Singapore-listed engineering firm ISDN Holdings Ltd (ISDN.SI), which has joined hands with Tun Thwin Mining Co Ltd to build and run a coal-fired power plant in northwest Myanmar, said last month it may look at separate listings for its coal-related ventures in Myanmar.

($1 = 1.2437 Singapore dollars)

(Additional reporting by Aung Hla Tun in YANGON, Rachel Armstrong and Rujun Shen in SINGAPORE; Editing by Jason Szep and Edwina Gibbs)