Of IPOs, REITs and Trains

Chris Bassett on August 29th, 2015 with

Thailand doing business

The Thai business marketplace, as with others around the world, remains in a state of flux in terms of alternating between general confidence and mild pessimism. Two glaring example of both are the communications coming out from Thai Foods Group Plc (TFG) and Banpu Power, a subsidiary of Banpu Plc, Thailand’s largest coal miner, in relation to their proposed initial public offerings (IPOs).

In the case of Thai Foods Group, its management has announced a delay to its IPO, which had been set to begin in September this year. Primarily involved in the poultry business, from hatcheries to contract farming, and raw chicken meat processing for both export and the domestic market, TFG had planned to release 1,400 million shares with the expectation that the company would raise around one billion baht.

Thailand TFG

Taken from company website

This has now been put on an indefinite hold, primarily due to what company executives are claiming are too many risk factors in both the domestic and global economic environment. [1]

Yet, on the other side of the IPO coin, the management of Banpu Power announced it was planning to launch its IPO on the Stock Exchange of Thailand (SET) next year. It is aiming to use the proceeds from the launch to expand renewable energy in both the domestic and overseas market, investing in solar power, biogas power, biomass power and wind power.

The renewable energy business is viewed as a great opportunity and Banpu Power expects to see strong returns. Coal prices in the global market have dropped during the past three years and Banpu Power executives note the company has an investment budget the equivalent of US$300-$400 million per year to outlay on renewable energy.

Banpu is currently investing in energy power in countries like Mongolia, China, Indonesia, Japan and India and aims to increase its capacities to 4,000 megawatts from its current 2,300 megawatts.

Thailand Banpu Power

Visual from Banpu website

The company has more than five energy power projects overseas as an independent power producer (IPP) with sizes ranging from 800 to 1,000 megawatts. [2]

REIT’s gaining popularity

Two Thailand-based real estate investment trust (REIT) funds‚ the Thailand Hospitality Fund and the Best Bonded Warehouse Fund recently announced they will offer their shares to the public during September and October this year. Both REITs have received the approval of Thailand’s Securities and Exchange Commission (SEC).

According to the SEC, Thailand currently has 57 registered REIT funds, of which 40 have registered an increase in value, while 17 funds have declined in value.

The Thailand Hospitality Fund is managed by One Asset Management Limited (ONEAM) and is a freehold REIT, which invests in hotels and resorts. Management of ONEAM said it expects the fund expect to pay an estimated divided of 7-7.5 percent per year for the next 10 years.

Best Bonded Warehouse invests in warehouse, distribution and logistics assets and is expected to have a total value 1,594 million baht (159.4 million units with a10 baht par value) and will be managed by Finansa Asset Management Ltd (FAM). FAM was established in 1969 and  currently has about 14 billion baht under its care.

FAM was acquired by CIMB-Principal Asset Management Company Limited (Thailand) and almost wholly owned by CIMB-Principal  Asset Management Bhd, along with other subsidiary companies in Singapore and Indonesia. [3]

Trains from China

At the sixth meeting of the Thailand-China Joint Committee, held between 6 and 8 August in Chengdu, China, an agreement was reached between the Thai and Chinese governments for the investment of around 300 billion baht for the construction of an 873-kilometre railway for medium speed trains.

The bidding process for the first two construction contracts is expected to start in the fourth quarter of this year.

The Transport Ministry said the State Railways of Thailand will borrow around 200 billion baht from domestic financial institutions to invest in the civil structure. A joint venture firm will then be established, with Thai state agencies holding 60 percent of the equity and the Chinese government the other 40 percent. This will be formally finalised in the seventh meeting in September.

The first phase, a 133-kilometres route from Bangkok to Kaengkoi and a 138.5-kilometres route from Kaengkoi to Nakhon Ratchasima province, is expected to start the construction in late October 23. The whole project is expected to take two and a half years to complete.

Logo Thai Railway

The State Railway of Thailand’s logo

The Thai government had previously planned to obtain a loan from China’s Export-Import Bank at an interest rate below two per cent for a 25 to 30 year period. However, the details of this are still not finalised and discussions between Thailand and China are still ongoing. [4]

Social media in Thailand

Yello Digital Marketing Group, a South Korean digital marketing company, recently acquired a majority shareholding in the Bangkok-based social media analytics firm Computerlogy.

The newly-expanded company will use its resources to develop a research & development centre aimed at keeping abreast of the rapid change in advertising technology.

YDM is a subsidiary of Yello Mobile Group which provides everything from creative digital marketing strategies to mobile advertising network platforms as well as viral and SNS marketing. The South Korean mobile media group is divided into more than 70 companies covering five major business sectors: shopping, media & content, advertising & digital marketing, travel and online-to-offline (O2O) services.

Yello Mobile was only founded in 2012 and presently employs around 2,000 people and claims to have 24 million monthly service users. YDM is involved with 22 companies throughout Southeast Asia, including Singapore, Indonesia, Thailand and Vietnam, with over 1,700 employees providing services to more than 5000 clients.

Computerlogy won the Facebook Developer World Hack competition in 2012 and was one of the first Thai companies to receive the Facebook Marketing Partner badge in Southeast Asia, so the link with YDM and Yello Mobile seems a natural fit. [5]

 

 

 

 

[1] http://www.dealstreetasia.com/stories/thailand-based-food-processor-tfg-delays-ipo accessed 25/8/15

[2] http://www.dealstreetasia.com/stories/thailands-banpu-power-plans-ipo-for-next-year accessed 25/8/15

[3] http://www.dealstreetasia.com/stories/thailand-to-see-two-reit-launches-in-next-two-months accessed 25/8/15

[4] http://www.dealstreetasia.com/stories/first-phase-of-china-thai-railway-set-to-build-in-q4 accessed 25/8/15

[5] http://www.dealstreetasia.com/stories/ydm-acquires-majority-stake-in-thailands-computerlogy accessed 25/8/15

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