Saturday May 10, 2008
IFC acquiring 5% stake in Acap
WB unit seeks role in NPL management
PARISTA YUTHAMANOP
International Finance Corporation, the World Bank's investment arm,
will acquire a 5% holding in MAI-listed Acap Advisory Plc for an
undisclosed amount. Arun Kumar Sharma, the head of structured finance
for IFC, said Acap would be used as a base to develop the business of
managing non-performing loans in the region.
Acap manages 40 billion baht worth of non-performing loans, including
2.5 billion worth of assets purchased from banks in Malaysia.
The company also holds a 51% stake in Capital OK, the consumer finance
company founded by Shin Corporation. Orix Corporation, Japan's largest
consumer finance company, holds the remaining 49% in Capital OK.
Acap has 125 million baht in registered capital and its own
management, led by CEO Vivat Vithoontien, hold the majority shares.
Acap's partners include Orix with 20%, South Africa-based Standard
Bank with 4% and Japan Asia Investment Corporation 5.6%. IFC would buy
5% of the shares at an undisclosed price from existing shareholders.
Mr Arun said IFC's investment in Acap was ''relatively small by its
standards, but it represented a strategic move to strengthen the much
needed distressed asset management [business] in the region''.
''The knowledge that exists in companies like Acap is emerging
countries is quite limited. There is a system for NPLs in India,
Argentina, Brazil and Mexico. But it is quite limited in the region.
Only China and the Philippines have such a system in place,'' he
said.
Mr Arun said IFC's investment in Acap would be a base for the
development of asset management businesses in Laos, Cambodia, Mongolia
and Indonesia, for example.
''We have conducted on-site due diligence of Acap and have studied its
track record. We have been assured of its governance and disclosure
and the quality of its people. We have a lot of confidence that Acap
is the right partner,'' he said.
''IFC ventured into the asset management business in the region eight
years ago, starting in the Czech Republic. We have a presence in China
where we probably have done the most and the Philippines. We want to
expand to Thailand, Indonesia, Pakistan, Colombia and Africa.''
Mr Arun said IFC would be more selective in its investment in Thailand
in the future, with priority given to underdeveloped segments such as
infrastructure, finance and environment, after three decades of
operating in the country.
Mr Vivat said Acap had an overseas office in Kuala Lumpur and was
looking to expand to Indonesia and China in the near future.
Saringkarn Sutaschuto, Acap's executive director and the managing
director of Capital OK, said Acap expected the asset management
business to generate 40-45% of its income while consumer finance and
accounting would contribute 25-40% and 20% of operating income in this
year.
Acap's operating income is expected to double to one billion in 2008
from 800 million in 2007. Income from accounting is expected to
increase from 300 million baht last year.
''Our assets under management grew to 25 billion baht from 3 billion
[at the start of] 2007. We've started 2008 with 25 billion baht in
assets under management and we expect them to grow to 40 billion baht
at the end of the year. Therefore, it is possible that our income will
double,'' Mr Saringkarn said.
He said Capital OK was upgrading its debt collection and risk
management systems after Acap and Orix Corporation acquired the firm
from Shin Corp early this year.
Capital OK, with three core businesses including SME lending, consumer
finance and hire-purchase, is expected to resume lending in the second
half of 2008. It expects to expand its credit card base to 200,000
customers from 55,000 over the next few years.
''Capital OK's credit card campaign must be different from the larger
issuers. Our business has been languishing since mid-2006 as Temasek
wanted to dispose of Shin Corp's financial services,'' Mr Saringkarn
said.
''We have spent the first three months after the acquisition doing
risk management and we will spent three months for marketing
campaigns.''
Shares of Acap closed yesterday on the MAI at 10 baht, unchanged, in
trade worth 0.93 million baht. The company reported 2007 net profits
of 185.18 million baht, up from 31.39 million the year before.
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