UPDATE 2-BankThai to sell stake to U.S. fund, shares rise http://today.reuters.com/news/articleinvesting.aspx?type=mergersNews&storyID=2006-08-28T085129Z_01_BKK7682_RTRIDST_0_FINANCIAL-THAILAND-BT-UPDATE-2.XML
Mon Aug 28, 2006
(Adds share reaction, details and quotes)
BANGKOK, Aug 28 (Reuters) - BankThai PCL (BT.BK: Quote, Profile, Research) (BT) said on Monday it would sell a stake of up to 25 percent to U.S.-based private equity fund TPG/Newbridge for 5-7 billion baht ($133-186 million) to help expand its business, sending its shares sharply higher.
The sale was expected to be completed in three to five months, bank President Phirasilp Subhapholsiri told reporters.
At 0835 GMT, BT shares were up 9.7 percent at 6.80 baht, while the main Thai index <.SETI> was down 0.8 percent. The stock hit near a 4-month high of 7.35 baht after the announcement.
"We chose to negotiate with TPG because the fund can provide money and financial expertise without adding more staff," Phirasilp said.
BT, Thailand's number eight bank with $6.4 billion in assets, told the stock exchange it would issue 940 million new shares for private placement, rights and public offerings.
Of that, the bank expected to offer about 500 million new shares to TPG/Newbridge and aimed to set the share price early next year after completing due diligence, Phirasilp said.
The share plan would raise the bank's registered capital to 61.4 billion baht from 52 billion baht, it said in a statement.
BankThai is 48.98 percent owned by the central bank's Financial Institutions Development Fund and 5 percent by a unit of Japanese's insurance firm Millea Holdings Inc. (8766.T: Quote, NEWS, Research).
TPG/Newbridge, which manages over $5 billion of capital, is the Asian investment arm of private equity firm Texas Pacific Group Ventures Inc. [TPG.UL].
BankThai had said it was looking for a partner to help expand its business as the government encourages consolidation ahead of a planned liberalisation and increasing foreign competition that some analysts say smaller banks might not survive.
Earlier this month, Bank of Ayudhya PCL (BAY.BK: Quote, Profile, Research), Thailand's sixth biggest commercial bank, won government approval to sell a 25 percent stake to a General Electric (GE.N: Quote, Profile, Research) subsidiary in a $400 million deal.
Other banks which have formed foreign alliances in recent years include the Thai unit of Singapore's United Overseas Bank (UOBH.SI: Quote, Profile, Research), UOB Radanasin Bank, which merged with Bank of Asia last year to form United Overseas Bank (Thai).
In 2004, state-run TMB Bank (TMB.BK: Quote, Profile, Research) took over another state-run financial firm and a Thai unit of Singapore's DBS group (DBSM.SI: Quote, Profile, Research) to create Thailand's fifth-largest bank by assets.
BOOST CAPITAL
BT, valued by the market at $246 million, expected the fund raising plan to boost its capital adequacy ratio to 12-13 percent from 9.6 percent, Phirasilp said.
"TPG Newbridge is quite happy with what we are now. The fund hopes that it will help push us to become the best boutique bank," he said. BT is expected to report a 80 percent rise in 2006 net profit to 1.1 billion baht and 1.5 billion baht in 2007, according to analysts polled by Reuters Estimates.
In the first six months, the bank reported a net profit of 603 million baht. The bank has said it aimed to increase its loans by 20 billion baht this year. At the end of July, it had outstanding loans of 96 billion baht with corporate business accounting for 60 percent and the rest 40 percent including small companies and retail customers. ($1=37.68 Baht)
� Reuters 2006. All Rights Reserved.