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Thai Business Outlook for 2024: Challenges and Adjustments

The economic landscape for Thai small businesses in 2024 appears bleak, overshadowed by a persistently sluggish economy. Despite some large companies outperforming their peers, many have been compelled to reevaluate their structures and enhance liquidity through substantial financial maneuvers. Noteworthy transactions this year included the significant restructuring of the Sirivadhanabhakdi family’s businesses in food and real estate, as well as an end-of-year investment by CP Axtra—part of the Charoen Pokphand (CP) group—into the Happitat mall project at Forestias, which operates under the same corporate umbrella. Numerous other corporations have engaged in similar dealings in their quest to fortify their market positions.

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Gulf-Intouch Restructuring Scheduled for Completion in 2025

Authored by: Sirivish Toomgum and Yuthana Praiwan

A major development emerged in July 2024 when Gulf Energy Development Plc (GULF) and Intouch Holdings Plc (INTUCH) disclosed their plans for a strategic amalgamation aimed at restructuring their affiliated companies within the group. This union serves to combine Gulf’s established leadership in the energy sector with that of Intouch, the parent company of one of Thailand’s foremost telecom operators, Advanced Info Service (AIS).

The Gulf PD power plant in Rayong.

According to Gulf’s official correspondence to the Stock Exchange of Thailand, the entire amalgamation process is projected to conclude by the second quarter of 2025. The objectives of this partnership include simplifying the shareholding structure, shoring up the group’s financial health, and diversifying the investment portfolio for sustained growth across the energy, infrastructure, and digital sectors.

As of August 2024, Gulf owned 41.73% of Intouch, which, in turn, controls 40.44% of AIS. Following shareholder approval in October, both companies are moving forward with the amalgamation and anticipate a new public limited company to emerge from the collaboration. Gulf’s founder, Sarath Ratanavadi, expressed optimism during a recent shareholder meeting in Bangkok, asserting that this merger is expected to propel business performance and earnings profitability at the newly formed entity.

Yupapin Wangviwat, Gulf’s chief financial officer, articulated that the new company would align its investment and revenue structures more effectively. Historically, 70% of Gulf’s net profits stemmed from the energy and infrastructure sectors, but that ratio is projected to shift to 60% and 40%, respectively, upon merger completion.

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Robinhood App Remains a Vital Player in Food Delivery Market

Investor group sees potential in the company’s food delivery service

The competition in the on-demand food delivery sphere is expected to remain vibrant, with the Robinhood app still holding a crucial market position. This premise is backed by industry evaluations as Robinhood continues to function within the competitive landscape.

A Robinhood delivery driver in Bangkok.

In a significant turn of events, Thai financial technology group SCB X Plc sealed a deal in October 2024 to divest its entire stake in Purple Ventures Co Ltd, which operates the Robinhood app, to a consortium of investors led by the Yip In Tsoi Group. The total transaction value was estimated at up to 2 billion baht, comprising an upfront payment of 400 million baht along with a performance-based component that could yield an additional 1.6 billion baht.

The investor group encompasses notable entities including Yip In Tsoi Group, Brooker Group Plc, SCT Rental Car Co Ltd, and Loxbit Plc. Morakot Yip In Tsoi, CEO of the Yip In Tsoi Co Ltd, acknowledged the inherent value within Robinhood’s food delivery service. However, e-commerce expert Pawoot Pongvitayapanu suggested that the new investors would likely not position Robinhood as a market disruptor, emphasizing a focus on small merchants instead.

Thanawat Malabuppha, the honorary chairman of the Thai E-commerce Association, indicated that a severe price war in the online food delivery sector is not anticipated following the acquisition. The new investors are set to benefit from Robinhood’s extensive seller database and a vast user base. Initially, SCB X contemplated shutting down the Robinhood app in July but delayed this move due to ongoing acquisition evaluations.

Furthermore, Robinhood recently announced a partnership with PayPoint to enable users to redeem points for discounts on their food orders using the app, with this service expected to roll out in 2025. PayPoint is a platform that allows users to collect and trade points for purchasing goods and services at partner locations both domestically and internationally.

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SCB X’s Home Credit Vietnam Acquisition Set to Conclude in H1 2025

Authored by: Somruedi Banchongduang

On February 28, 2023, SCB X, a prominent financial technology conglomerate and the parent company of Siam Commercial Bank (SCB), revealed a sales and purchase agreement to acquire the total charter capital of Home Credit Vietnam Finance Co, a consumer finance subsidiary of Home Credit NV. The acquisition is valued at approximately 31 billion baht and is anticipated to close in the first half of 2025, following the necessary regulatory approvals.

The strategic move strengthens the group’s presence in the high-growth Southeast Asian market while increasing shareholder value and delivering long-term returns, said Mr. Arthid.

Founded in 2008, Home Credit Vietnam has rapidly ascended to become a key competitor in the country’s consumer finance sector, offering a diverse array of financial products aimed at the mass and upper-mass markets, including durable consumer loans, revolving loans, cash loans, and two-wheeler loans. With a customer base exceeding 15 million across Vietnam and a network of 14,000 point-of-sale locations, the company reported net profits approximating 1.9 billion baht in 2022, showcasing a significant annual growth rate.

As of June 30, 2023, Home Credit Vietnam commanded a substantial 14% market share in the burgeoning consumer finance landscape of Vietnam, underlining its formidable position. SCB X’s chief executive, Arthid Nanthawithaya, described this acquisition as a pivotal moment in the group’s journey to establish itself as a leading financial tech powerhouse in the region.

With Vietnam’s economy characterized by an average GDP growth of 7.5% over the past decade, SCB X views this acquisition as a strategic entry into a market brimming with growth potential and favorable demographics. This move is anticipated to impact the group’s financial performance positively from the outset, further diversifying income streams to maintain stability.

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Hospitality Sector Insights: Noteworthy Developments

Grande Asset’s Hyatt Sale Sets a New Record

Reported by: Narumon Kasemsuk

Despite the tourism sector possibly lagging behind the government’s targets for visitor arrivals, recording over 33 million arrivals in the first 11 months of the year, the hospitality market, especially in Bangkok’s gateway city, has witnessed remarkable activity.

Hyatt Regency Bangkok Sukhumvit is conveniently located on Sukhumvit Soi 13.

In a landmark transaction in November, Grande Asset Hotels and Property sold the Hyatt Regency Bangkok Sukhumvit to Grand Residence International for a staggering 5.05 billion baht. As identified by Jones Lang LaSalle (JLL), this transaction marks the largest single-asset hotel sale on record in Thailand, particularly noteworthy in Bangkok’s highly competitive grade-A hospitality market. The sale comprised several key assets associated with the operation of the 31-story Hyatt hotel and The Allez Mall, covering three plots of land in the prime Sukhumvit Soi 13 location.

This significant sale has facilitated cash inflow for the company, allowing for the repayment of existing loans and reduction of financial pressure from interest expenses. It also provides necessary funds for ongoing and future projects aligned with Grande Asset’s business objectives. The SET-listed developer Property Perfect, which oversees Grande Asset, reported an uptick in revenue derived from its hotel venture during the third quarter, contrasting with its performance in residential development.

Grande Asset is rumored to consider offloading the Royal Orchid Sheraton Hotel, located by the Chao Phraya River, for an estimated 6 billion baht in 2025 to further bolster its financial standing.

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Sansiri’s Strategic Exit from Hotel Investment in the U.S.

Reported by: Kanana Katharangsiporn

In a notable turn of events, SET-listed developer Sansiri, which significantly invested in the U.S.-based lifestyle hotel chain Standard International since 2017, has now decided to divest its entire stake to the Hyatt Group for approximately US$355 million.

Sansiri will continue to own four properties now managed or franchised under the Hyatt brand, namely The Standard, Hua Hin; The Standard Residences, Hua Hin (pictured); The Peri Hotel, Hua Hin; and The Peri Hotel, Khao Yai.

Sansiri acquired a 35% stake in Standard in 2017 and gradually increased this to 71%, which will now be entirely transferred to Hyatt. Despite this divestment from Standard, Sansiri will maintain ownership of four properties currently managed or franchised under the Hyatt brand.

Uthai Uthaisangsuk, president of Sansiri, expressed that the proceeds from the sale will significantly enhance their net profits for the third consecutive year. The decision regarding the sale was timely, as it coincided with Standard’s growing portfolio—including 21 hotels and approximately 2,000 rooms across prime locations such as New York and Miami.

Sansiri leaders outlined plans to utilize part of this profit to alleviate the company’s debt burden, targeting a reduction in the gearing ratio while reallocating funds to other investment opportunities. Since investing in Standard, they positioned themselves strategically to capitalize on the potential expansion of a robust hotel brand.

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