Thai billionaire Charoen Sirivadhanabhakdi is building up a war chest for an overseas property-buying spree as companies controlled by the liquor and real estate tycoon announced a nearly billion-dollar capital raise on Monday.
SGX-listed Frasers Property, which is controlled by the family of Thailand’s third-wealthiest man, said it had received commitments from its two largest shareholders, TCC Assets and ThaiBev, for a S$1.28 billion ($950 million) rights issue aimed at fuelling acquisitions and the establishment of new property investment vehicles.
Together, Charoen’s property firm TCC and ThaiBev, which produces Chang beer, are expected to cover about 87 percent of the subscription, Frasers Property said in a filing with the Singapore Exchange.
“Prevailing macroeconomic, social and geopolitical uncertainties have led to added challenges to business whilst concurrently giving rise to new opportunities and trends,” said Panote Sirivadhanabhakdi, group CEO of Frasers Property. “The COVID-19 pandemic has accelerated some of these trends, specifically in the areas of e-commerce adoption, the drive to build supply chain resiliency, as well as the reimagining of spaces to allow for flexible, multiple use of spaces.”
Panote, the youngest son of Charoen, said the rights issue would enhance the firm’s ability to respond to such trends and ultimately increase long-term shareholder value.
Frasers Property will issue 37 rights shares for every 100 existing shares held by entitled shareholders at a price of S$1.18 per rights share. The proceeds will go to expanding the firm’s logistics and business park portfolio and cutting the level of debt relative to equity to 85 percent from the current 99.3 percent.
Entitled shareholders can receive the rights shares from 11 March to 25 March. Listing and trading of the rights shares is expected to begin on 5 April.
Frasers Property intends to use S$700 million of the share sale’s proceeds to acquire and develop business park and industrial real estate assets, including logistics facilities. A further S$250 million is earmarked to set up private funds or joint ventures to invest in property assets, and up to S$330 million will be used for general corporate purposes.
Industrial assets, together with business parks and offices, make up a combined 44 percent of Frasers Property’s real estate assets, which totalled S$33 billion as of last September — up from S$19.4 billion five years earlier. The firm also sponsors five REITs and has retail, residential and hospitality interests across Asia Pacific and Europe.
Charoen is Thailand’s third-richest individual, with a fortune estimated at $10.5 billion last year by Forbes. The chairman of Frasers Property took control of the Singapore-based firm in 2013 as he looked to expand his holdings regionally.
Weathering the Storm
The pandemic may have triggered a refocusing of priorities at Frasers Property, which manages more than S$8 billion worth of retail assets in Singapore.
Last July, the firm agreed to sell a 50 percent stake in a suburban Singapore shopping centre to cousin group TCC for S$1.1 billion. The transaction valued the 2017-vintage Northpoint City in Yishun at S$3,785 per square foot of net lettable area, the highest price on a unit area basis achieved for a suburban retail mall in Singapore in recent years.
Frasers Property said it would book an extraordinary gain of S$50 million from the transaction, with TCC paying a 4.5 percent premium to the book value of S$1.05 billion as of September 2019.
Community retail has been a favoured investment theme for Frasers group in recent years, with the firm having repositioned its Singapore unit as Frasers Property Retail during 2019 as it built up a portfolio of 14 malls in Singapore, primarily in the city’s suburban areas.
In the case of the Northpoint City deal, TCC was willing to pay above book value despite Panote’s warning in an April announcement that, along with other mall owners, Frasers Property was “facing an uncertain environment that impacts our business performance and inevitably, revenue and earnings”.
Proceeds from the Singapore mall deal were to help Frasers Property reduce its level of debt relative to equity, a figure that had reached nearly 107 percent in March 2020, the company said.