LAOS-BASED Kolao Group has become the first private company from that country to tap the Thai corporate bond market, raising US$25 million in a private placement today.
“We raised the funds from the Thai capital market in order to pay back some of our bonds that we issued in the Singapore capital market three years ago,” the company’s global coordination division director Yong Hoon Ralph Byun said in an interview with The Nation recently.
“We will also use some of the funds raised to add to our capital for business expansion in the region.”
Adisorn Singhsacha, managing director of Twin Pine Group, financial adviser of Kolao Group, said the three-year bond offered by Kolao – which operates in the motor vehicle industry – has an interest rate of 5.5 per cent, with interest payments every six months.
“We took two months to apply to Thailand’s Securities and Exchange Commission (SEC) for Kolao to issue the debenture in the Thai capital market, but the process was worth it because we see an opportunity for Thailand to become a financial hub in the region,” Adisorn said.
“We have to open up our financial markets to serve the needs of companies in neighbouring countries to raise the funds required to drive their business growth – in both the stock and bond markets.”
Kolao Group established its business in Laos in 1997 with the creation of Kolao Developing Co Ltd by Korean investor Sei-Young OH.
The company imports and sells automobiles, and motorcycles in Laos. It then expanded its distribution business for imported cars in the country, before moving into new automobile distribution in 2000 and automobile production in 2003.
Kolao was listed on the South Korean stock market in 2010.
Company founder Sei-Young OH has been the chief executive officer and chairman of Kolao since its inception. He is also the major shareholder, holding about 44 per cent of the company as of March.
The company’s long presence in the market has helped it to achieve a strong brand awareness among Laos. Kolao has more than 40 per cent of overall market share in Laos’ automotive industry.
TRIS Rating has assigned a company rating of “BBB-” for Kolao Holdings. The rating reflects “Kolao’s proven track record in the automotive in-dustry in the Lao People’s Demo-cratic Republic, solid competitive position, high operating efficiency, and acceptable financial profile”.
Kolao Holdings, with its subsidiaries, manufactures, imports, and sells automobiles and motorcycles mainly in Laos, Myanmar, Vietnam and Cambodia. The company’s automobile unit imports and distributes automobiles, buys local used cars, and designs, processes, assembles, distributes and exports cars under its own brand Daehan.
Its motorcycle operation designs and sells motorbikes under the Kolao brand and processes and assembles parts. The company’s wholesale unit sells accessories and other supplies designed for automobiles and motorcycles. Its after-sales operation provides repair services for cars and motorcycles in addition to after-sales support.
The group booked sales of US$338 million in 2016 and is aiming for growth of up to 7 per cent this year from the year before, Byun said.
“We decided to issue our corporate bond in Thailand’s capital market as we see it as a financial hub in this region,” he said. “We are confident in the Thai capital market as a place for us to raise capital for our business expansion over the long term.”
Byun said the group plans to invest up to US$12 million to set up a manufacturing plant and showroom in Cambodia and the company also has plans for Myanmar after its success in setting up a plant in Vietnam.
“We see our investment focus as being in Asean, and in Thailand we also the potential for us to expand our business in the future. But I cannot disclose now what I will do in Thailand,” he said.
Stock Exchange of Thailand (SET) president Kesara Manchus-ree said in a recent interview with The Nation that the SET is promoting its services to foreign companies for capital raisings in Thailand.
These companies must have an adequate financial structure that matches the SET’s standard, Kesara said, adding that the efforts to draw foreign companies was part of the country’s drive to become a financial services and capital markets hub in the region.
“The CLMV countries are our main target and so we are inviting companies from these countries to raise funds in Thailand’s capital market,” she said, referring to Cambodia, Laos, Myanmar and Vietnam.