Dealers spy B40bn in fund inflows
Foreign funds worth 40 billion baht have flowed into Thailand, believed to be for an acquisition deal for a large company, says a currency dealer.
The massive fund inflow has strengthened the baht at a faster pace than other currencies in the region, said the dealer, who requested anonymity.
According to recent local media reports, two large foreign companies are in the process of acquiring stakes in two big Thai firms.
Taiwan-based CTBC Bank Co Ltd is purchasing 7.55 billion newly issued shares, representing a 35.6% stake, of Land and Houses Financial Group (LHFG), the holding company of Land and Houses Bank, at a price of 2.20 baht each, or 16.6 billion in total.
Rutt Phanijphand, chairman of the executive directors of LHFG, said recently that proceeds to buy the new shares would be gradually injected into the Thai firm by next month.
The parent firm of LH Bank called for an extraordinary shareholder meeting on July 12 to seek approval of the recapitalisation of 7.55 billion shares offered to the Taiwanese bank.
In another deal, Reuters recently reported that Siam Commercial Bank had entered into exclusive talks with Hong Kong insurer FWD Group to sell its life insurance arm, which could raise US$3 billion (103 billion baht) for Thailand's No.3 lender.
FWD, owned by Hong Kong tycoon Richard Li, the youngest son of Asia's richest man, Li Ka-shing, entered into exclusive talks in March and a decision is likely by the end of May, Reuters quoted three people who were familiar with the deal as saying.
In 2012, FWD paid $2.14 billion in cash for ING Groep NV's Hong Kong, Macau and Thai insurance operations.
Another currency dealer said odds of a further Federal Reserve rate hike this year decreased after it raised the rate by 25 basis points on Wednesday. The baht rose to its highest point in almost two years against the US dollar yesterday.
The baht climbed to 33.83 to the dollar before weakening to 33.97 in late trade. It traded at 33.91 on Wednesday.
Low expectations for another Fed rate hike this year will keep the baht in the region of 33 to the dollar for a while, the dealer said. The baht is among the best-performing currencies in Asia, up 5% this year.