TMB Bank and ING partner to advise Thai firms in cross-border MAs

Stocks and Financial Services Press Releases Thursday October 5, 2017 13:43
Bangkok--5 Oct--TMB Bank

TMB Bank Pcl and ING Corporate Finance Asia have announced a partnership to provide a full range of services to Thai companies seeking to expand across borders through merger and acquisitions. The announcement was made at a seminar held recently in Bangkok for about 70 TMB customers under the title "Hunting Ground beyond the Comfort zone: Cross-Border M&A".

The partnership will help companies across a broad range of industry sectors to expand in neighboring countries such as Cambodia, Laos, Myanmar and Vietnam, a sub-region often referred to as CLMV, as well as in other parts of Asia and the world depending on the companies' strategies and capabilities.

"Many very large Thai corporates have already made acquisitions overseas but we are aiming this new service at TMB's mid-sized customers, listed on the exchange or not, who have the capability and the interest to go overseas and are looking for the right opportunities," said Senathip Sripaipan, Chief Wholesale Banking Officer at TMB. "These are companies with annual sales of up to ten billion baht. For companies making consumer goods, the CLMV region is quite interesting because it's close to home, its markets offer similarities with Thailand, logistics costs are affordable, and they enjoy a higher economic growth rate."

Data collected by the Stock Exchange of Thailand shows that listed Thai companies are seeing a growing share of their revenues coming from overseas operations. At end 2016, 198 firms, representing 39% of all SET-listed companies, were invested abroad, 116 of which in the CLMV countries. In 2017, the CLMV countries are forecast to enjoy average GDP growth of around 7 percent, compared to the 3.5% growth forecast for Thailand.

"Cross-border M&As offer good prospects while risks are manageable and its not something reserved to very large corporates," Senathip said. "Some go across borders looking to expand their market, some are looking for new production bases."

"ING is a global bank they can see more investment opportunities overseas than we do, while TMB's strength is our understanding of our Thai customers, once we partner we can provide a full range of services, from the hunt for partners across borders, to advisory service, deal making and the funding for acquisitions," Senathip added.

"What we have seen over the last five years is increasingly Asian counterparties to M&A representing a growing number of international transactions," said Michael Niederberger, Managing Director, Head of Corporate Finance Asia at ING. "What we are seeing increasingly from Asian acquirers is that they are looking for technology investments, in IP, R&D, skills and services. that cater to the greater demand for the rising income levels."

ING Corporate Finance Asia has a team of 20 bankers offering M&A advisory services to clients in the region.

A recent example of cross-border M&A by a Thai company is provided by AAPICO Hitech Pcl, a car parts manufacturer, which this year invested around 3.5 billion baht ($100 million) to acquire a 25% stake in Sakthi Global Auto Holdings Ltd., a global car parts supplier. Sakthi has operations in India, Europe, and China, as well as research and development facilities in the United States, which through this deal AAPICO will be able to tap. TMB's investment banking department helped AAPICO complete the transaction by providing credit facilities and advisory services.

"That company has got global reach. We want to grow bigger and then we want to produce good products, so now that we have partners in America as well, we can do R&D, so our target now is to be able to produce one or two global products for the world," said Yeap Swee Chuan, President & CEO, AAPICO Hitech.

A thorough due diligence in the selection of the right partner and market is an essential part of the M&A process and a key focus of the advisory services provided by TMB and ING.

"Within your space, your industry, there will be certain natural countries you want to go to, but within that geography you want to go to a market where you'll make a difference," said Thiam Kit Lee, Managing Director, Asia ING Bank N.V. "You want to be relevant, if you are relevant you have a better chance to be successful."

"When we find an opportunity, basically the most important is whether the two sides fit. If there is good character and competency, at least we pass the first hurdle, AAPICO's Yeap added."

Value added services jointly provided by TMB and ING to TMB corporate clients also include support in working capital management. They recently hosted for the first time in Thailand an exclusive session of the "TMB and ING Financial Supply Chain Business Simulation Game" to help companies lower their borrowing costs and optimize the use of working capital.

TMB Bank Pcl has been operating since 1957. ING Bank N.V. is a major shareholder in TMB since 2007.

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