In the News: 2004

Lombard / IFC Fund to list Thai Paper Packaging Company

Asian Venture Capital Journal
26 April 2004

Yet another liquidity event has taken place in Southeast Asia, with Lombard and IFC's $245 million Thailand Equity Fund seeing the listing of one of its portfolio companies, S.Pack & Print, on the Stock Exchange of Thailand, at an IPO price of Baht 17.00 per share.  S.Pack is a paper packaging company that TEF invested Baht 161 million ($4.1 million) into in December 2003.  The fund owns approximately 23.3% of the post-IPO company.

According to Lombard's Bangkok-based Managing Director, Pote Videt, the deal is attractive, as the fund paid only Baht 11.50 per share, although there are no plans to cash in.  "We are generally long-term investors and have no plans to exit.  Management has a sizeable stake and we aim to support their growth plans in the coming years.  And besides, with an announced dividend of Baht 1.00 per share, we should enjoy an attractive yield," he added.

Structured as a domestic investment vehicle, and hence allowed to buy shares as a local investor, the Thailand Equity Fund was launched in 2001 by co-sponsors Lombard and IFC, with support from the Government of Thailand.  Besides IFC, investors in the fund include CalPERS, ADB, and DEG, as well as the Thai Ministry of Finance and 15 Thai institutions.

Videt is bullish on the current environment for private equity in Thailand.  "We will see a pick-up in private equity activity this year, as we expect the domestic demand growth to be sustainable.  There will also be a strong pick-up in investment spending to support a growing need for capital," he told AVCJ.  According to Bank of Thailand figures (February 2004), year-on-year private consumption and investment have respectively grown 4.4% and 23.2%, with fiscal trade surplus hitting $510 million.

Such optimism may have figured in TEF's decision to invest Baht 462.5 million ($11.1 million) into TICON Industrial Connection, an industrial facility outsourcing company, through a special issue of convertible preferred shares.  The deal, announced in December of last year, closed in February 2004 after shareholders' approval.

As of December 2003, TICON operates more than 113 factories, with another 58 under development.  "TICON is well positioned to directly benefit from Thailand's competitiveness as a regional manufacturing base for Southeast Asia and the growing inflow of direct foreign investment," commented Videt.