Three sectors lead way in seeking fund mobilisation

CIMB Thai Bank has seen demand for fund mobilisation, including for mergers and acquisitions, in the logistics, food and beverage and hospitality sectors thanks to assurance that the government’s infrastructure mega-project is to become a reality.

Sittichai Mahaguna, the bank’s executive vice president and head of corporate finance and equity capital markets, said yesterday that foreign companies in those three sectors were looking for strategic partners in Thailand, while Thai companies in the three industries planned to raise funds in preparation for the mega-projects and for the onset of the Asean Economic Community.

He said the bank was  preparing to manage deals for next year worth Bt14 billion to Bt16 billion, comprising three initial public offerings, one real estate investment trust (REIT) and three M&A activities.

“Next year will be a good time to be introducing private equity. Therefore, the number of IPOs is expected to be higher than this year,” he said.

The picture of fund mobilisation through the equity market next year is brighter thanks to political stability and clear regulations on investment products such as REITs, he said.

“An indicator of the bright outlook for the equity market is the overwhelming book building by foreign institutional investors at recent roadshows, as they have more confidence in Thai politics,” he said.

CIMB Thai Bank says the value of fund-mobilisation deals handled by the bank next year should be higher than this year for the above reasons. The value of such deals this year is expected to reach Bt23 billion.

Year to date, CIMB Thai has worked on two deals worth Bt5 billion, and more than Bt18 billion worth will be handled next quarter. The deals in the fourth quarter will consist of two property funds, two IPOs and four M&A activities. CIMB Thai is active in the equity capital market. In the past three years, it worked on 11 IPO deals, totalling more than Bt50 billion, and seven M&A deals worth more than Bt16 billion in total.

“Each deal must be promising enough to attract investors, though some deals might take time, because our strategy is to help customers’ investments reach high valuation,” he said.

CIMB Thai expects the ratio of revenue from advisory versus underwriting services next year to be 50:50 compared with 60:40 this year, as it expects to be the underwriter for larger IPOs in 2015. External factors might also have an impact on equities. For example, expected European stimulus programmes might make bonds more attractive than  equities, he said.