Invest in foreign trade via Thai holding firms: SET

To become a matchmaker for these financing opportunities, the Stock Exchange of Thailand (SET) has worked closely with the Securities and Exchange Commission to make holding company regulations more flexible in order to allow and encourage investment in foreign assets.
Now, Thai firms running businesses abroad have a greater chance to raise funds through the Thai capital market for expansion. However, the listing criteria for holding companies differ from those of other Thai listings due to a difference in laws and accounting practices, and investors need to understand these key differences as well as their overseas business opportunities.
Hence, the SET has arranged for speakers from brokerage houses, financial advisers and holding companies to present information and insights for investors. The amendment of listing rules for holding companies helps fulfil SET’s aim to become a leading capital market, as well as to match opportunities by being a funding source for businesses and an investment source for investors in the Greater Mekong Sub-region, which is a significant market with growth potential.
The highlight of this amendment, which has been effective since September 1, 2012, is to allow Thai holding companies to base their main business operations overseas. Since a foreign firm cannot be listed in the Thai capital market, listing a Thai holding company that has its core business overseas serves the capital needs of the foreign subsidiaries of Thai firms, joint ventures with foreign governments and other foreign firms seeking to be listed on the SET. Take Amata VN and CK Power for example.
As subsidiaries of well-known Thai listed firms, Amata and CK, are holding companies with their core businesses outside Thailand, as they are among the first few firms to raise funds to support their main operations abroad, ie, developing industrial estates in Vietnam and power plants in Laos, respectively.
The first factor that Thai holding companies with core businesses overseas need to be aware of is that they must be able to effectively supervise their subsidiaries.
To investors, investment in overseas business via a Thai holding company is another choice to diversify their portfolio and capture the high economic growth of the Greater Mekong Sub-Region and other areas.
It satisfies investors’ appetite of diversifying into foreign assets via a Thai holding company, with its familiar Thai-capital market rules and regulations as well as SET trading, settlement and clearing. Nevertheless, investors cannot overlook the differences of accounting standards, tax implications and laws and regulations of the overseas operating country and Thailand affecting the operation of overseas businesses, dividends, and more importantly, shareholder protection.
Investors should also study related risks, such as local business practices, markets and government policies and implementation.
This is another opportunity and choice for overseas business expansion, enabling investors and other stakeholders in the Thai capital market to access funding and more variable products.
As the gateway to the Greater Mekong sub-region, SET is looking forward to offering more such opportunities to investors and companies in the years to come.

Paveena Sriphothong is senior vice president, Stock Exchange of Thailand