K I Woo
Aug 4, 2015
Hidden in the SEC filings of the recent successful Bangkok Ranch IPO are the tremendous returns generated by local and international institutional investors that backed the group’s initial management Bt5.7 billion buyout (MBO) from Navis Capital in December 2012.
Institutional investors realized internal rates of return (IRR) of more than 59 per cent per annum at the Bangkok Ranch (BR Group) initial public offering (IPO) on the Stock Exchange of Thailand (SET) on July 15, 2015.
The MBO was financed by a Bt4.1 billion loan from a Siam Commercial Bank-led consortium. Local and international equity investors along with company management contributed approximately Bt1.6 billion.
Although the Thai economy has not performed as well as other ASEAN economies, its vibrant expanding capital markets are providing tremendous opportunities for both private entrepreneurs and institutional investors to realize tremendous profits from opportunistic investments.
BR Group with operating plants in Thailand and in Holland is one of the world’s largest duck purveyors.
Prior to the IPO, the company’s disclosure statements indicated that local and foreign institutional investors held about 56 per cent of the company’s equity.
Danai Pathomvanich, Hatton Capital Partners managing director who advised Bangkok Ranch’s founder and CEO Joseph Suchaovanich and his management team on the initial Bt5.7 billion BR Group management-led buyout (MBO) in December 2012 said he was pleased with this investment’s tremendous returns.
“Institutional investors purchased their initial shares in December 30, 2012 at about Bt2.7 per share. Some foreign institutional investors sold their shares at the IPO for Bt8.8 per share on about July 15, 2015.”
According to initial SEC filings, existing shareholders sold about 132 million of the 360 million shares being offered at the IPO. Danai said a majority of 132 million shares sold were by international institutional investors.
At the IPO, Bangkok Ranch raised about Bt3.16 billion from public shareholders. Bangkok received about Bt2 billion and several institutional investors that sold pre-IPO shares received about B1.16 billion. The IPO was underwritten by Bualuang Securities.
Several local institutional investors held on to their shares. On July 23, Bangkok Ranch shares closed at Bt 10.8 per share.
“I would like to express my congratulations on the successful Bangkok Ranch IPO , that has contributed to our fund’s IRR exceeding 45 percent per annum. At the moment, it makes us one of Thailand’s Best Private Equity Funds,” said Thanawat Aroonpun of Straits Asset Advisor, the advisor to investors GSB Private Equity Fund and UOB Private Equity Fund.
BR Groups founder and chief executive officer, Joseph Suchaovanich said the IPO proceeds will be used mainly to expand business capacity by building a new large-scale slaughter house and duck meat processing factory in the far-eastern part of Thailand.
In the first phase, the new factory will accommodate nine to 10 million ducks per year, adding about 40 per cent to current total capacity.
“The IPO and the expansion will support our plan to expand into large markets including Indonesia, Vietnam and China.
Hatton Capital Partners is a financial advisory and investment company with offices in Shanghai, Hong Kong and Bangkok with total assets under management exceeding $US250 million.
Danai said Hatton Capital Partners clients are continuing to invest in Asia and especially ASEAN because they believe its future growth and dynamic human capital resources will continue delivering superior investment returns in the next several decades.
“We are currently actively evaluating investments in several infrastructure, food production and retail finance businesses in the region for our partners,” he said.