GE unit confirms it will purchase 25 per cent of BAY
GE Capital International Holdings Corp has confirmed it will buy a 25.4-per-cent stake in Bank of Ayudhya (BAY), with the first share purchase to be made by January 10.
According to a statement submitted by BAY to the Stock Exchange of Thailand yesterday, GE Capital International Holdings (GECIH) - a unit of US giant General Electric - sent written confirmation on Monday of its intention to purchase capital-increase BAY shares. "They have confirmed that payment for the first lot of 1.39 billion shares will be made by January 10 next year," said Charlotte Dhonavanik, first senior executive vice president of BAY. BAY stock closed 0.54 per cent up at Bt18.70 yesterday. Due to the political uncertainty following the bloodless coup on September 19, both parties had agreed to postpone the share subscription plan. A total 2 billion shares, equivalent to a 25.4-per-cent of stake in BAY, will be purchased by the GE unit. The shares will be sold at Bt16 apiece, meaning GECIH will invest a total of Bt22.24 billion in BAY. "GECIH has also given a written guarantee from GE Capital Corporation, the parent company of GECIH, to the bank to guarantee the subscription of the capital-increase shares," BAY said in its statement. The sale has been divided into two transactions in order to avoid violating the 49-per-cent limit on foreign ownership of Thai banks, said BAY. Currently, foreign investors hold a combined 32-per-cent stake in BAY, Thailand's sixth-largest bank. Issuing new shares to GECIH will serve to dilute the level of foreign ownership in the bank. BAY said the price at which the remaining 609 million shares are sold could vary depending on when GE makes the final purchase, and that this could further dilute the foreign ownership level. Charlotte said that over the next two months, BAY and GECIH would draft a business plan for next year focusing on boosting retail loans. She said BAY aimed to achieve double-digit retail loan growth, but cannot do it alone. The bank's corporate loans are expected to grow 7-8 per cent next year, in line with economic growth. Currently, the bank's corporate-to-retail loans ratio stands at 87:13. BAY and GE have been working together in Thailand since the companies set up a credit-card joint venture called Krungsriayudhya Card Ltd in 2001. The joint venture reported 700,000 cardholders and US$339 million (Bt12.44 billion) in assets at the end of last year.
Somruedi Banchongduang The Nation
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