Share swap backs Kiatnakin-Phatra merger

The share swap is part of a merger between KK and Phatra Capital, with the value of newly issued shares of KK estimated at Bt7.3 billion, said bank chairman Supol Wattanavekin.
The merger will enhance competitiveness and prepare for financial liberalisation and the Asean Economic Community in 2015, he said.

After the merger, the Watta­navekin family, major shareholder of KK, will dilute its shareholding to 23.6 per cent from 30 per cent, while RPIC, major shareholder of Phatra, will dilute its shareholding to 8.7 per cent from 38 per cent.
As of October 31, KK had assets valued at Bt186.34 billion and Phatra had assets valued at Bt3.45 billion. After the merger, which is expected to be completed in the third quarter of 2012, the assets of the two firms will be Bt196 billion.

Supol said KK was not concerned about asset size as much as strengthening existing businesses, sustainable growth and profitability. Therefore, after the merger, the bank plans to consolidate its position as a specialised commercial and investment bank.
Banyong Pongpanich, chairman of Phatra Capital, said that the merger would have a positive impact on the market and also help reduce volatility in the securities business.

Six businesses
KK and Phatra will jointly operate new and existing businesses in both commercial and investment banking under the Kiatnakin-Phatra Financial Group. The six businesses will focus on high-net-worth clients; finance and debt instruments for medium-sized and large enterprises; derivatives; investment; fund management; and securities for retail investors. Assets under management of the two firms will exceed Bt200 billion.
However, the group will maintain two securities houses, Kiatnakin Securities and Phatra Securities, because the two firms have different customer bases. The merger will also boost the firm’s share in the brokerage business to 6.14 per cent, ranking it second in the market.
Tawatchai Sudtikitpisan, chief executive offer and managing director of Kiatnakin Bank, said Phatra was strong in corporate customers, while KK had a more complete range of financial products and services to offer corporate customers.

The bank’s portfolio has three segments: hire-purchase, SMEs, and retail clients. Outstanding loans are Bt126.32 billion.
KK will make a tender offer to purchase all securities from Phatra’s shareholders for delisting from the Stock Exchange of Thailand, under the |condition that at the end of the tender-offer period Phatra’s shareholders accepting the offer shall not represent less than 75 per cent of the total number of shares sold.