Thai Baron eyeing UE assets

https://i2.wp.com/upload.wikimedia.org/wikipedia/commons/c/cd/UE_Square_Shopping_Mall_2,_Nov_05.JPG

Thai beer baron Charoen Sirivadhanabhakdi is eyeing United Engineers (UE), which will allow him to expand his property portfolio in Singapore, a market he knows well, say analysts.

Mr Charoen is in the midst of talks with OCBC Bank and its concert parties about buying their combined stakes in UE, a property, engineering and construction group, and its WBL Corp unit.

Analysts told The Straits Times yesterday that the tycoon may be aiming to expand his foothold outside Thailand and sees a chance to do that by snapping up UE, which holds a sizeable property portfolio in Singapore.

“He probably wants to have a more diversified portfolio outside of Thailand…” said Voyage Research analyst Ng Kian Teck.

“Exploring opportunities in Singapore may interest him because he already has assets here, and he would have been scouting around to see (what is) available for sale.”

Mr Charoen’s net worth is about US$11.3 billion (S$14 billion), according to Forbes. He controls mainboard-listed developer Frasers Centrepoint Limited, which came as part of the package when he took over beverage giant Fraser & Neave (F&N) in a $13.75 billion buyout early last year.

His privately held TCC Group is also one of the biggest land owners in Thailand, and holds assets outside the country.

TCC owned the InterContinental Hotel in Bugis before injecting it earlier this year into the recently listed Frasers Hospitality Trust.

DMG analyst Goh Han Peng said Mr Charoen may be particularly interested in investment properties that “can generate recurring income with scope for capital appreciation”.

Frasers Centrepoint wants to grow the share of its revenue from investment properties, according to a Business Times report earlier this year. It noted that investment properties comprise 30 per cent of the group’s revenue with development projects bringing in the other 70 per cent.

Frasers Centrepoint group chief executive Lim Ee Seng had said in the report that the developer was eyeing “commercial assets, particularly suburban malls, offices and even business parks”.

This could fit in with UE’s portfolio of properties, which range from offices and shops to serviced apartments and light-industrial space. These assets include its flagship UE Square in River Valley, estimated to be worth $550 million, and UE Bizhub Tower at 79 Anson Road, which has an estimated value of $340 million.

UE also has four serviced residences under its Park Avenue arm. Its investment properties could be worth nearly $2.07 billion combined, and its residential developments about $627 million, according to a CIMB report last week.

Another reason Mr Charoen is eyeing UE could be a good working relationship with the sellers, market watchers said.

OCBC and its concert parties, which are insurer Great Eastern and the bank’s founding Lee family, together hold an estimated 34 to 36 per cent of UE, and have worked with Mr Charoen before.

The three parties sold their stakes in Asia Pacific Breweries and F&N to Mr Charoen for $3.2 billion in 2012, setting the stage for his F&N buyout – one of the biggest corporate takeover sagas in recent history.

Analysts said neither OCBC nor Mr Charoen was likely to feel pressured into inking a deal over UE. “It’s not a case where one side has to sell and the other has to buy. They can both walk away from the deal,” Mr Ng said.

If Mr Charoen does acquire UE, the deal would add to a lengthening overseas buying spree.

In June, Frasers Centrepoint launched a successful takeover bid for Sydney-listed Australand Property Group – formerly a CapitaLand unit – at A$4.48 per share, which valued the firm at about A$2.6 billion (S$3 billion).

Companies backed by Mr Charoen have announced US$4.5 billion worth of acquisitions this year, according to Bloomberg.

However, analysts said this was probably not because of uncertainty in Thailand. “The recent acquisitions are made with expansionary purposes… rather than being a defensive move to diversify out of Thailand,” Mr Goh said.

– See more at: http://business.asiaone.com/news/charoen-eyeing-ues-property-assets#sthash.IhqgqVqY.dpuf

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