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Bankers are preparing for more deal flow out of Thailand next year as Thai companies make further acquisitions overseas, helped by cheap funding, and as the Thai stock market continues recovering.
Thailand has been in a protracted state of political flux and in May the Thai military staged a takeover in yet another coup. But this uncertainty has in part fuelled offshore acquisitions as many Thai tycoons seek to diversify away from their home market, where growth is limited.
"Thai companies are outgrowing their domestic market," Xavier Jean, an analyst at S&P told FinanceAsia. "Money is very cheap so they are able to fund external operations at a very low cost and they want to diversify away from their domestic market."
According to one Hong Kong-based acquisition finance banker, there is already a strong pipeline of deals out of Thailand.
State-owned giants such as PTT are figuring out their strategy and looking at divesting stakes in refineries such as Bangchak Petroleum and Star Petroleum Refining. The state oil giant has hired Goldman Sachs and Phatra Securities for the sale of its 27% stake in Bangchak Petroleum.
According to a source familiar with the matter, that sale is ongoing.
"They [PTT and its subsidiaries] are trying to move away from what is the more volatile and low-margin refinery sector and [are] investing in higher value added product lines, in particular petrochemicals," S&P's Jean said.
He added that PTT holds minority stakes in Star Petroleum and Bangchak Petroleum and does not have significant management control in either companies. "They are legacy stakes and they no longer fit the strategic orientation of the company," Jean said.
PTT has also hired Bualuang Securities, Bangkok Bank and Morgan Stanley to study options that could include spinning off its retail arm, which operates petrol stations in Thailand.
The study is still at a preliminary stage but the company could potentially go for an initial public offering, a second source familiar with the matter said.
In addition, Thai Union Frozen is looking at Bumble Bee Seafoods and Thai conglomerate CP Group, controlled by tycoon Dhanin Chearavanont, is eyeing UK retailer Tesco's Thai business, according to news reports.
Looking good after quiet 2014
After a muted year, equity capital markets in Thailand also look set for a much busier 2015.
Total IPO volumes for Thailand so far this year are $2.1 billion, less than half the $5 billion raised in 2013, according to data provider Dealogic.
But Thailand's stock market has risen about 20% year-to-date and offer attractive valuations for companies looking to float their businesses, even if that keeps a lid on inbound mergers and acquisitions.
"Thai corporates have quite favourable valuations in the IPO market and there is less of rationale to sell business to foreign investors," one senior Bangkok-based banker said.
Among the frontrunners is Jasmine Broadband Internet Infrastructure Fund, which is expected to launch an IPO of about $1.7 billion in mid January.
Bualuang Securities and Morgan Stanley are the bookrunners.
"Relative to this year next year will be more active especially in equity and M&A which both rely more on the sentiment," the Bangkok-based banker said.
