By Ekarin Bumroonpguk
The Nation
Published on April 9, 2009

Many companies are in the pipeline to snap up foreign assets, Siam Commercial Bank said on Tuesday.

It aims to lend to strong Thai companies that wish to buy cheap foreign assets in order to expand their core business.

Recently, SCB was the solely provider of a Bt12-billion, 10-year loan to energy conglomerate PTT, part of which would be used to buy a coal mine in Australia.

Vichit Suraphongchai, executive chairman of SCB, said many foreign firms are in need of cash. Many of them had overleveraged in expanding their business.

When the crisis erupted, creditors called back loans from them. These companies are forced to “deleverage” by selling assets amid the gloomy economic environment.

“Asset prices in foreign countries have plunged, so it’s a good opportunity to expand for many strong Thai companies by buying those assets.

“This is better than starting a business themselves. PTT is an example of such a company as it aims to buy a coal mine in Australia,” Vichit said.

In the past, local companies were considered lacking the ability to take over foreign companies. But now, those in relatively good financial shape have a chance to go for it.

SCB has many deals queued up and those customers are the big, strong players in their industries.

“We have been speaking with many customers about their prospects to expand their business horizons, while asset prices in foreign countries have plummeted.

“Therefore, we need to talk with them on how they would like the bank to help, by raising funds either via loans or debentures,” Vichit said.

However, the bank would only support acquisitions that were in the customers’ core businesses. The assets that are presently being divested overseas mostly are not in the core business of the sellers. They would like to dispose of them for cash.

SCB has assigned some its bankers as relationship managers to take care of big corporate customers that need structured finance, foreign currency, cash management and other financial service packages.

Before, banks only functioned as a lender but now they have already changed to acting as a solution provider for customers.

Prasert Bunsumpun, president and CEO of PTT, said PTT needed Bt230 billion to use over the next five years, of which 70 per cent was for investing in natural gas and the rest for rolling over debt.

PTT aimed to become a premier multinational company, which built up its business in foreign countries, while PTT Exploration and Production had invested in 40 projects in 13 countries.

PTT Group has a capital expenditure budget of Bt800 billion, of which 80 per cent was for domestic investment, which could boost domestic employment and reassure foreign investors, and 20 per cent was for foreign countries.