THAILAND is well placed to establish itself as the main centre for corporate capital raising in the Asean region, thanks to the country’s economic potential, market liquidity and supportive financial regulations, said the founder of an advisory group with connections across the region.
Adisorn V. Singhsacha, who started the Twin Pine Group, also highlighted Thai investors’ understanding and knowledge of financial markets. Twin Pine is an adviser for cross-border fundraising for companies based in the so-called CLMV countries – Cambodia, Laos, Malaysia and Vietnam.
Adisorn, who is chief executive of Twin Pine Group, said this knowledge of the financial markets among Thais enabled them to diversify their portfolios to cover instruments of various credit risk levels to yield investment returns.
“This is evident through the successful issuance of the THB bonds by the Ministry of Finance of the Lao PDR and the THB debentures by EDL-Generation Public Company (EDL-Gen), as well as the upcoming first cross-border debenture issuance by a Myanmar-based company in the Thai capital market," he said.
With these factors, Adisorn expressed his confidence in Thailand’s ability to establish itself as the centre for capital raising in Asean. In addition to its strong economic potential and market liquidity, Thai regulators - including the Ministry of Finance, the Bank of Thailand and the Securities and Exchange Commission - have regulations in place to facilitate qualified CLMV-based companies to raise funds in the Thai capital market.
Furthermore, Thai investors’ knowledge of the markets is comparable to that of investors from countries with developed financial markets. Investors are able to select from a number of financial instruments such as sovereign bonds, corporate debentures and equities; this reflects their ability to accept varying credit risk levels and to diversify their portfolio to seek returns from different investment opportunities, Adisorn said.
“The ability for CLMV-based companies to raise funds in the Thai capital market will allow for further regional growth and development, as well as financial cooperation and partnership,” he said. “Moreover, given these countries’ long-standing trade relations with Thailand, the fundraising exercises are expected to yield mutual benefits for CLMV and Thailand as trading partners.”
Adisorn said that there is an increasing trend for companies to do their fund raising in Asean. The issuance of bonds in local currencies by companies in the region grew 7.9 per cent year on year for the first nine months of 2018 - moving from US$83.5 billion to US$90.09 billion. Issuance of Asean G3 bonds grew 15.4 per cent year on year in the same period, from US$36.34 billion to US$41.93 billion, he said.
“The challenge is that there is still a level of currency mismatch between issuer use of proceeds and capital raised. However, there are financial instruments such as currency swaps that can help to cover this risk," said Adisorn, adding that the increase in cross-border trade within the Asean countries will continue to help reduce the mismatch.
“For Asean companies issuing in Thailand, the companies will still need to spend some time to familiarise investors with them.
“In recent years, the rules and regulation have made it easier for CLMV countries to do a cross-border bond issuance, especially in Thailand. CLMV companies have the opportunity to tap into different source of funding to support their growth and reduce their cost of funding.”
Kavin Hetrakul, managing director of Twin Pine Group, said the company has advised a number of issuers on fundraising transactions. Recent deals include the Lao Ministry of Finance’s issuance of baht-denominated bonds, which was well-received by Thai institutional and high-net-worth investors.
Similarly, the baht-denominated debentures issued by EDL-Gen were received favourably by Thai investors given the company’s stability, sound credit rating and attractive coupon. Both these deals reflect Thailand’s readiness to become the financial hub and the centre for capital raisings in the Asean region.
Twin Pine Group is the sole adviser to Yoma Strategic Holdings Ltd - a conglomerate based in Myanmar and listed on the Singapore Stock Exchange - in its upcoming baht debenture issuance in the Thai capital market. Over the past 10 years, Yoma has grown its business to cover real estate, automobile, food and beverages, and financial services.
The company maintains relationships with leading corporations and organisations such as Mitsubishi, Sumitomo, KFC, Telenor, the Asian Development Bank (ADB) and the International Finance Corporation (IFC). The proceeds from this fundraising exercise will be used to support the development of Yoma’s core businesses.
Yoma’s debentures will be guaranteed by the Credit Guarantee and Investment Facility (CGIF), a trust fund of the ADB, established by the Asean +3 countries to promote economic development, stability and resilience of financial markets in the region. This issuance will be the first CGIF guaranteed bond by a Myanmar-based issuer.
“Yoma’s debentures issuance marks the first time that a leading Myanmar company will access the Thai capital market to raise funds for its business expansion,” said Adisorn.
“This exemplifies Thailand’s ability and preparedness in becoming the centre of capital raising for Asean-based companies. Additionally, it highlights Twin Pine Group’s mission to provide Thai investors with opportunities to diversify their investments through various fundraising instruments from CLMV countries.”