(Source: Sucheera Pinijparakarn Asia News Network (MCT) — Thailand-focused merger and acquisition deals are expected to dramatically resume in 2013 as corporate companies have sufficient funds from fund mobilisation activities in 2012.
M&A activities in 2012 were low-key as corporates had to concentrate on recovery after being directly and indirectly affected by the floods last year, according to Vorada Thangsutrbkul, an executive vice president and head of investment banking coverage 2, Siam Commercial Bank.
She said that many deals were delayed because clients wanted to ensure the smooth running of their business after the floods. Some deals were delayed because customers wanted to secure the lowest price for their targeted business acquisitions.
Despite the delay, large-sized companies have raised funds through many instruments, including bonds to cash in on the lower cost of funds.
The Thai Bond Market Association (ThaiBMA) recently revealed that new corporate bond issues in the first half of this year raised 245 billion baht (US$7.75 billion), driven by the banking sector with 91.5 billion baht followed by the energy sector.
Vorada said that large companies have no problems with cash and they are tempted to acquire businesses overseas, especially in Europe and the US because many businesses there are writing off assets to pay off debt due to their countries’ financial crisis. Thai companies from the energy and agri-food sectors are among the first to eye acquisition of businesses in the US and Europe, she said.
However, the challenge for Thai firms is how to prepare their management team to oversee the business acquisitions.
She said that political stability is a positive factor for business confidence, especially the tourism sector where many companies plan to resume the launch of leasehold property funds.
SCB expects to close some property funds in the second half of this year. The bank is also in talks with 2-3 renewable companies to launch their infrastructure funds.
CIMB Thai Bank expects at least one or two property funds to debut trading in the second half of this year.
Subhak Siwaragsa, president and chief executive officer, CIMB Thai Bank, said that the bank uses its experience in investment banking to help customers raise funds, and M&A activities.
The CIMB Group’s investment banking has become stronger after the group acquired most of the Asia-Pacific cash equity and investment banking businesses of the Royal Bank of Scotland.
About 6-7 M&A deals, which are in the pipeline with asset size of 20 billion-30 billion baht will be completed in the second half, he said.
The deals are in Asean countries because CIMB Group has experience in the region.
“The M&A will see both Thai companies buy businesses in Asean and Singapore, and Malaysia companies buy Thai businesses,” he said.
He added that it is a good sign that M&A deals were being forged by medium-sized businesses.
Krung Thai Bank President Apisak Tantivorawong said that about 2-3 M&A deals will be finalised soon.
*1 dollar = 31.5 baht
©2012 the Asia News Network (Hamburg, Germany)
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