Ratanaraks returning to former prowess

Corporate December 25, 2012 00:00


5,982 Viewed

The Ratanarak family has recouped some of its past glory, building up a stake in Siam City Cement - one of its major assets that it had to divest partially in the aftermath of the 1997 financial crisis.

The family, which is also a major shareholder of Bank of Ayudhya (BAY) and Bangkok Broadcasting and Television (BBTV), the operator of TV Channel 7, sees its stake in SCCC rise from 37.7 per cent to 47 per cent after BBTV’s purchase of 9.3 per cent from Swiss cement firm Holcim.

Holcim’s stake in the second-largest Thai cement company will fall from 36.8 per cent to 27.5 per cent, enough to maintain its status as the strategic partner of SCCC.

The transaction marks a return of the Ratanarak family, which was forced to sell a majority stake in the cement firm to Holcim. Like other Thai banks, BAY suffered from a sharp increase in non-performing loans and had to recapitalise to avoid nationalisation. The family decisively cut its stake in SCCC from 74.5 per cent to 37.7 per cent. That could not save the banking business and the family had to sell its 33 per cent in the bank to GE Capital Group in 2007. That lowered its stake in BAY to 25 per cent.

“The Ratanaraks took 13 years after the economic crisis in 1997 to make a return as the biggest shareholder in the family business,” a source close to the family said yesterday.

The Ratanaraks have been one of key Thai business families, along with the Sophonpanichs and the Lamsams. Forced to lower stakes in BAY and SCCC, the Ratanaraks were able to maintain their dominance in BBTV, which has been a cash cow. Until very recently, Channel 7 has been No 1 in advertising revenue.

“Krit Ratanarak, the family leader, decided to keep the reins at BBTV, as it generates better returns than other businesses,” the source said.

However, according to the source, Krit has never given up the dream to rebuild the family business, with attempts to return as the biggest shareholders of all business units.

This was manifested through his agreements with strategic partners of both BAY and SCCC – they can sell the stakes but the family retains the first option. With the family’s consent, they can offer the stakes to third parties.

With the support of GE Capital Group, BAY is now a leading retail bank. In the first 11 months of this year, its loans grew by 13 per cent. Asia Plus Securities yesterday raised its projection for the bank’s 2013 earnings by 3 per cent to Bt18.5 billion. The rosy outlook makes the bank an attractive target for foreign banks, including Japan’s biggest bank Mitsubishi UFJ Financial Group.

BAY’s management has said the entry of a new managing shareholder presents an opportunity rather than a threat – it could bring with it a client base and/or expertise in niche banking/finance applications. However, whoever is buying the stake from GE Group will require the Ratanaraks’ consent.

Similarly, if Holcim wants to reduce its stake in SCCC further, it will need to ask the family whether it is interested in the stake, the source said.

Siam City Cement is a leading construction-materials group with annual production capacity of 16.5 million tonnes at its Saraburi plant. With 3,250 employees, the company earned Bt2.87 billion on revenue of Bt20.47 billion in the first nine months of this year.

Most view