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Steep rise in Thai mergers and acquisitions as firms fight off virus crisis

Aug 06. 2020
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By The Nation

The Covid-19 pandemic has sparked a steep rise in mergers and acquisitions, according to an expert at CIMB Thai Bank (CIMBT).

Businesses are choosing to fight the crisis by expanding or merging – especially in the hotel, health, hospital, and production sectors, said Pornchai Padmindra, CIMBT's co-head of Wholesale, Corporate, and Investment Banking.

"Currently, many more bank customers than previously are discussing business mergers and acquisitions in deals worth from Bt1 billion to Bt20 billion," he said.

"We expect customers to close their merger and acquisition deals within three to six months or in 2021 after observing business directions and ensuring the price is reasonable."

He said 60 per cent of M&A deals were being made in Thailand, with the remaining 40 per cent in Asean countries such as Vietnam, Cambodia and Indonesia.

"Therefore, we expect the bank's revenue from granting loans to large businesses to grow by 7-9 per cent in 2021 [year on year], and this year by approximately 6 per cent from loans of approximately Bt70 billion," he said.

"Financial transactions among Asean countries in 2021 are expected to grow by 20-30 per cent compared to this year."

He said quality of large businesses' debt was not a concern because the bad-debt level at CIMBT was currently only 2 per cent and the bank was helping customers to control their borrowing.

"We will control bad debt to ensure that it will not rise over 3 per cent," he said.

He added CIMBT was prepared to extend up to Bt20 billion in loans for the business sector, of which 40 per cent had already been granted.

"We believe that the prepared credit limit will be sufficient because the situation in the bond market has now begun to improve," he added.

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