Srisawad Power 1979 Plc, a consumer finance company, aims to list on the Stock Exchange of Thailand in April to support its outlet expansion and improve its credit profile to ensure long-term access to cheaper funds.
The major source of funds at Srisawad is bank loans.
The company’s Bt4-billion debt with banks gives it a debt-to-equity ratio of 3.5 times.
After raising funds by selling 250 million shares in an initial public offering, the D/E ratio will improve to more than 1, managing director Doungchai Kaewbootta said yesterday.
After the IPO, its registered capital will rise to Bt1 billion from Bt750 million.
Chairman Thanong Bidaya said that entering the SET would help build up the credit of the company.
It hopes to be assigned a rating of “BBB” so that when it has to issue bonds, it will get a lower interest rate than what banks charge.
Srisawad is well known upcountry with 602 outlets. It plans to expand to 1,000 outlets within five years to boost its loan portfolio to Bt10 billion in the period.
As of last September 30, Srisawad’s loan portfolio was worth Bt5.38 billion, of which 82 per cent was cash loans to car owners, 13 per cent was cash loans to land and real-estate owners, and 5 per cent was personal and instalment loans to buyers of new motorcycles.
Doungchai said the company was affected somewhat by the long-delayed payments to farmers under the rice-pledging scheme.
Those who borrowed from the company to buy combine harvesters cannot make their debt payments on time.
The company has extended the terms of loans and allowed customers pay whatever they can afford, she said.
Customers in the agricultural sector represent less than 5 per cent of the loan portfolio.
Srisawad has adjusted its lending criteria as part of proactive measures to defend against rises in bad debt.
The loan-to-value ratio for used vehicles has been tightened to 30-70 per cent from 40-80 per cent, and loans for new motorcycles are now limited to Bt50,000.