Ekarat Engineering Plc, a producer of solar cells and power transformers, has allocated 68 per cent of its new shares offered via initial public offering to persons that support its business, saying they understand the company's operations and this will prevent volatility in the stock price.

Ekarat has priced its 182 million IPO shares at Bt3. The IPO will boost the company's paid-up capital to Bt790.17 million, from Bt608.17 million, with par value of Bt1 per share. The IPO is set for next Thursday and Friday and the stock will start trading on June 30.

Ekarat yesterday signed a contract with Far East Securities Co Ltd as lead underwriter, and eight co-underwriters. Far East Capital Advisory Co Ltd is Ekara's financial adviser for the listing.

Thamarong Chiantechakul, managing director of Far East Capital Advisory, said Ekarat would reserve 125 million shares - or 68 per cent of the total 182 million new shares - for people that support the company's business, while the remaining 57 million shares will be allocated to retail and institutional investors.

Kietpong Noichaiboon, CEO of Ekarat Engineering, said his company had set aside a large block of shares to persons who support the business because they understand the company's operations better than retail investors. This is also aimed at preventing stock price volatility from small investors taking profits. He said the Securities and Exchange Commission had already endorsed this allocation.

"The persons who support our business include our customers, suppliers, and existing shareholders. After our talks with them, they agreed to hold our stock for the long term as they understand our business well and believe in our long-term prosperity. The existing shareholders including me will be subject to the silent-period rule of 18 months, so we don't need to worry about stock price volatility," he said.

Chaiphan Pongthanakorn, CEO of Far East Securities, said he was not concerned about the stock price of Ekarat, although the SET Index has plunged to below 700, as the Bt3 price was set in line with the company's fundamentals. The price is reasonable in view of the income that would be derived in the future.

Chulchit Bunyakrtu, chairman of Ekarat Engineering, said his company's stock would be warmly welcomed by investors despite the volatile market.

The company's revenue is growing about 20 per cent on average and the power transformer business has good growth potential. Ekarat's market share is now 30 per cent.

Siriporn Chanjindamanee

The Nation