ThaiBev, TCC Assets Complete $1.7B Frasers Property Share Swap

ThaiBev, the SGX-listed beverage and food giant founded by billionaire Charoen Sirivadhanabhakdi, has completed the transfer of its stake in Frasers Property to a private vehicle controlled by the Thai liquor tycoon, as part of a S$2.1 billion ($1.7 billion) share swap intended to boost the Singapore-based property giant’s sliding valuation.

Over 93 percent of ThaiBev’s shareholders on Friday approved the swap, which saw the company’s InterBev Investment Limited (IBIL) subsidiary divest its entire 28.78 percent stake in Frasers to TCC Assets, a holding company owned by the Sirivadhanabhakdi family, while TCC transferred a 41.3 percent interest in SGX-listed food, beverage, and publishing conglomerate Fraser and Neave (F&N) to IBIL.

As explained when the swap was first proposed, the deal offers Sirivadhanabhakdi a path to a higher valuation for Frasers, which has seen its SGX-listed shares hover at all-time lows after shedding 55 percent of their value over the last five years. At S$1.89 per share, the swap price implies a market capitalisation of S$7.4 billion for Frasers and represents a 136 percent premium to the company’s closing share price on 17 July, a day before the proposed swap was announced.

“Following completion of the Proposed Share Swap, the Company (through IBIL) has become the holding company of F&N (and its subsidiaries), and the Company and IBIL have ceased to hold any interest in FPL (Frasers Property) and FPL is no longer an associated company of the Company,” ThaiBev said in a filing.

Valuation Boost

Based on a price of S$1.89 per Frasers share and S$3.55 per F&N share, the swap was executed at a ratio of 1.88 Frasers shares for each F&N share and did not involve any cash outlay. ThaiBev said the negotiated prices and swap ratio were backed by a “robust” valuation assessment undertaken by its financial adviser, Singapore-based DBS Bank.

“The Company is of the view that the low trading liquidity and current market prices of both F&N and FPL do not appropriately reflect the fair values of each business,” ThaiBev said in a July filing proposing the swap.

ThaiBev and DBS utilised a net asset value (NAV)-based approach to determine the range of fair values for Frasers, which took into account the company’s most recent financials, the latest market values of Frasers’ stakes in listed REITs, as well as the value of its asset management platform based on precedent transactions using a price-to-earnings ratio of 18 times.

The valuation exercise also applied a discount of 20 percent to 25 percent to Frasers’ “revalued” NAV based on selected precedent privatisations of SGX-listed real estate companies by controlling shareholders, including last year’s buyout of developer Chip Eng Seng by mainland investors Gordon and Celine Tang, CapitaLand’s take-private of its development business as part of a restructuring in 2021, and Wheelock’s privatisation of its Singapore unit in 2018.

Other take-private transactions referenced in the valuation include Global Dragon Limited in 2023, Perennial Real Estate Holdings in 2020, United Engineers Limited in 2019, and LCD Global Investments in 2015.

“The negotiated prices of F&N and FPL are within the fair value range of each of F&N and FPL respectively, as determined by DBS, and in line with the relevant benchmarks as stated above, whilst allowing the Company to benefit from the strategic merits of the Proposed Share Swap,” ThaiBev said in the July filing.

Property Market Headwinds

Following the swap, TCC Assets’ stake in Frasers rose from 58.1 percent to 86.89 percent, putting the company’s free float just over 3 percentage points above the 10 percent minimum threshold under SGX listing rules, while its interest in F&N was reduced from 58.9 percent to 17.6 percent. At the same time, ThaiBev no longer holds any interest in Frasers, while its stake in F&N increased from 28.31 percent to 69.61 percent.

ThaiBev also pointed to the transaction as potentially helping to unlock a higher valuation as a pure-play food and beverage company through the divestment of its stake in Frasers, as well as gaining increased exposure to the non-alcoholic beverage and dairy segments through its majority share in F&N.

Frasers currently operates across five sectors, including logistics, retail, office and business parks, hospitality, and residential, with assets spanning Singapore, Australia, Europe and the UK, Southeast Asia, and China. The company had been a wholly owned subsidiary of F&N until its spinout and subsequent listing on the Singapore Exchange in 2014.

The property firm posted attributable net profit of S$35.8 million for the six months ended 31 March, representing a 81.8 percent drop from the prior year, while revenue declined 20.4 percent over the same period to S$1.5 billion. Frasers attributed the profit plunge to unrealised fair value losses and impairments on UK commercial properties, higher interest costs, and lower residential contributions in Singapore and Thailand.

“Continual market headwinds have created ongoing challenges for us, which are reflected in these results,” Frasers’ group CEO Panote Sirivadhanabhakdi, the youngest son of the elder Sirivadhanabhakdi, said in the company’s earnings announcement.