Phirasilp Subhapholsiri, left, president of BankThai, announces yesterday that the institution has signed a memorandum of understanding with TPG Newbridge, represented by its partner Weijian Shan, with respect to the subscription of new shares in the bank

BankThai announced yesterday that it had signed an exclusive memorandum of understanding with TPG Newbridge to subscribe to new shares equivalent to 31 per cent of the bank's stock.

The sale will give TPG Newbridge - an Asian investment arm of the US-based Texas Pacific Group - a stake roughly equivalent to the diluted stake, following the share increase, of the state-owned Financial Institutions Development Fund, BankThai reported in a filing to the Stock Exchange of Thailand.

The FIDF, a rescue fund for financial institutions, currently owns 48.98 per cent of BankThai or 731.45 million shares. The bank had earlier planned to sell TPG Newbridge a stake of 24.99 per cent.

BankThai president Phirasilp Subhapholsiri and TPG Newbridge executives attended a meeting yesterday with the Bank of Thailand to discuss the issue. TPG Newbridge was represented by its partner, Weijian Shan.

Phirasilp said after the meeting that although TPG Newbridge is only a fund, it has large assets and has invested in manufacturing as well as financial institutions globally.

"This will benefit BankThai as they will provide the bank with more technical know-how," he said.

Phirasilp said earlier that TPG Newbridge had requested a stake in BankThai equal to that held by the FIDF.

The bank plans to increase its capital by 940 million shares at a par value of Bt10 each, which will increase its registered capital from Bt52 billion to Bt61.4 billion.

Phirasilp said on Tuesday that the bank would offer TPG Newbridge and its co-investors 731.45 million shares, equal to the FIDF's holdings.

The acquisition deal is expected to completed in January or February pending the bank's 2006 earning results, which will be used to set the share price.

However, Phirasilp said the price offered would not be lower than the bank's book value. BankThai shares closed yesterday at Bt6.25, up 3.3 per cent on the day.

Phirasilp said the bank and the new investor had already completed management due diligence, while legal and accounting due diligence will take about six to eight weeks to complete.

He said yesterday that funds from the new investor were expected to be injected into BankThai within the first quarter next year. However, he does not yet know the total value of the funding.

Phirasilp added that the bank had received Bt6.9 billion in compensation from the FIDF after transferring assets totalling Bt80 billion to the Thai Asset Management Corp under a loss-gain sharing agreement.

Anoma Srisukkasem

 The Nation