Flurry of Thai overseas acquisitions will raise forex volatility, BoT warns
Thai companies' massive overseas shopping spree will increase volatility in the foreign-exchange market, the Bank of Thailand said yesterday.
“Overseas investment is influencing the dollar-baht exchange rate by weakening the baht. This is a good sign, as this counter-flow will lead to a balanced movement, allowing the baht not to be too strong or too weak. This will increase volatility but there is no sign of worries now,” Assistant Governor Pongpen Ruengvirayudh said.
Attributing the corporate hunt for assets abroad to higher wages at home and free-trade agreements, Pongpen said the outflows, though raising volatility, were offsetting the inflows, mostly into the bond and equity markets.
Recently PTT Exploration and Production bid US$1.9 billion (about Bt60 billion) for Cove Energy in the UK and Thai Beverage offered $2.2 billion for Fraser & Neave in Singapore.
Pongpen said that if PTTEP had prepared some US dollars for payment, this would not severely affect the baht. On the ThaiBev deal, she said it was big but not done yet.
Two people close to the deal said ThaiBev was in talks with three banks to help provide financing for its purchase.
HSBC Holdings, Standard Chartered and Sumitomo Mitsui Financial Group’s lending unit are working on a bridge loan to support the transaction, the people said, asking not to be identified because the details are private. A bridge facility is a short-term loan used until a company secures permanent financing.
ThaiBev would finance the entire transaction through the loan, one of the people said. The company had $108 million in cash and near-cash items as of March 31, data compiled by Bloomberg show. Terence Foo, a Singapore-based spokesman for ThaiBev at public relations firm Kreab Gavin Anderson, declined to comment on the financing. Shares of ThaiBev fell 2.7 per cent to 35.5 Singapore cents at 2.06pm. Asia Pacific Breweries jumped as much as 18 per cent to S$49.50 before trading at S$48.70, while Fraser and Neave gained 4.5 per cent to S$7.93.
Heineken, the world’s third-largest brewer, last week offered $6 billion to acquire full control of Asia Pacific Breweries.
