The buying spree being undertaken by Thailand’s leading conglomerates seems to be showing no signs of abating. Last year, Singapore-based conglomerate Fraser & Neave Holdings was purchased by Thai Beverage and TCC Assets, both of which fall under the business empire of Thai billionaire Charoen Sirivadhanabhakdi, for an estimated $11bn. Added to this was also the Chareon Pokphand Group’s acquisition of a 64.3% stake in trading company Makro for $5.8bn from SHV Nederland by its listed affiliate CP All Public Company.

Earlier this year, the Siam Cement Group clinched a Bt7.2bn ($220m) acquisition of 85% of Prime Group Joint Stock Company – Vietnam’s leading building materials manufacturer – boosting the Thai industrial conglomerate’s overall tile production capacity to 225 million square metres, the largest in the world. Then, in August, the Berli Jucker, another affiliate of Mr Charoen, agreed to pay €655m to buy out Metro in Vietnam, where the German cash-and-carry chain operates 19 stores in 14 cities.


This spate of Thai acquisitions, mostly in south-east Asia, comes ahead of the advent of the Association of South-east Asian Nations (Asean) Economic Community (AEC) at the close of 2015, when a free flow of most goods and services is scheduled to begin across the region. Other Asean firms are also investing regionally but Thai conglomerates appear to have gotten a head start.

A recent Standard & Poor’s study of the top 100 Asean companies found that between 2008 and the first quarter of 2014, 17 Thai firms accounted for about $21bn, or 40% of the $55bn-worth of acquisitions reported in the region during the period, according to S&P credit analyst Xavier Jean. Mr Jean added that these were just acquisitions made by listed firms, and if the buy-outs made by unlisted firms were included the amount would have been much higher.   

S&P noted that the buying spree had in part been spurred by access to cheap credit. The 100 companies surveyed had an estimated aggregate debt of nearly $270bn as of March 31, 2014, of which some $160bn had been notched up during the 2008 to 2014 period. Many Asean firms, especially those from Thailand, are considered to be highly leveraged.

Mr Jean said: “We don’t currently see corporate debt levels in Asean as dangerously high. Banks remain profitable, liquidity remains available and refinancing amounts are manageable. The bigger risk in our view is a sudden withdrawal of liquidity, because of a much sharper increase in interest rates or a loss of confidence by creditors and a turn in the credit cycle.”

Economists have pointed out, however, the larger companies within the Asean region that are not expanding are taking a risk. “If they don’t invest now, other companies will, so they would be better making the first move,” said Charl Kengchon, managing director of the Kasikorn Research Center. “If they think they can afford it, if they have enough capital and the economies of scale, why not?”

The Siam Cement Group (SCG), for instance, has been concentrating on the whole Asean market, giving it a potential customer reach of 600 million people, compared with just 65 million in its home market of Thailand. In recent years, the group, Thailand’s largest industrial conglomerate, has spent Bt70bn on 28 mergers and acquisitions, most of them in the Asean region.

“As of end-September 2014, our Asean assets were valued at 17% of total assets,” said Kan Trakulhoon, president and CEO of SCG. In 2013, SCG’s revenues grew 7% to Bt434.3bn, with 65% of sales generated in Thailand, 9% in Asean and 26% from exports, of which 11% were to Asean countries. Mr Kan, for one, is not worried about the group’s debt. “SCG has strong financial discipline and we maintain our internal leverage," he said.