Thai companies likely to grow through M&A under AEC

Thai companies likely to grow through M&A under AEC

Watchiranont Thongtep
The Nation November 29, 2013 1:00 am

In preparation for the Asean Economic Community in 2015, major Thai companies are likely to be more active in pursuing mergers and acquisitions of firms in the region while multinational corporations are focusing more on business expansion in Myanmar, financial and investment experts said yesterday.“In the past few years, the baht has become very strong. Thai companies like Thai Union Food and Thai Beverage have become the most active in acquiring overseas business while inbound M&A witnessed a slowdown,” Chua Soon Ghee, managing partner for Southeast Asia at Singapore-based AT Kearney, a global management consulting firm, said yesterday.

Chua was speaking at a seminar titled “Countdown to 2015: Creating Asean Champions”, organised by AT Kearney and leading advertising and media agency JWT.
He suggested that M&A was a way for Thai companies to grow in the region but some Thai companies still lacked high-skilled employees to coordinate and link the business between the head office and regional offices.
Pornchai Padmindra, senior executive vice president and head for wholesale banking at CIMB Thai Bank, said this trend was continuing. It could be observed at all levels and sizes of business, not only in big companies.
“The key areas where Thai companies would be able to grow through M&A strategy are energy, resources, infrastructure, retail and hospitality sectors,” Pornchai said.
Even though international companies appear to find it difficult to seal M&A deals with Thai companies, largely because of legal limits and regulatory barriers, major Thai industries such as property, automotive, manufacturing and telecommunications are still very attractive for inbound M&A.
Apart from the M&A approach, Pornchai said foreign direct investment into the Kingdom would be among key trends next year despite the current economic and political uncertainties. Japanese firms were, for instance, continuing to invest in the country, particularly in manufacturing sectors, as they were shifting their manufacturing base from China.
Under the Abenomics policy of Prime Minister Shinzo Abe, Japanese companies are optimistic of investing in Thailand but mainly in their own operations for organic growth rather than taking over local businesses.
However, with economic and political reforms in Myanmar, many multinational and Thai companies are eyeing this newly emerging country for M&A and joint-venture deals.
Bob Hekkelman, chief executive officer for Southeast Asia at JWT, suggested that the M&A approach would be the way for local companies to go regional in coming years, particularly in preparation for the AEC.
Southeast Asian companies need to create a regional game plan, map out an M&A strategy and start investing more in branding over the next two years if they want to emerge as regional champions, according to a report by JWT Asia Pacific and AT Kearney.
Southeast Asia is on the cusp of a new era. In two years, the AEC will come into effect, creating a single market and production base with a free flow of goods, services, investment, and skilled labour.
Asean’s population is projected to reach 650 million by 2020, with half under the age of 30.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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