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Siam Investment Fund II

Siam Investment Fund II L.P.

Siam Investment Fund II L.P. was a limited partnership established in December 2000 with total commitments of $ 57 m. The Fund's term was 10 years with a commitment period of five years. The commitment period has now ended and the Fund’s liquidation was approved in March 2011.The Fund's objective was to capitalize on investment opportunities in Thailand through privately negotiated equity or equity-linked investments. The Fund targeted companies with strong fundamental businesses, undervalued assets, discernable franchises and favorable prospects for growth, either domestically or internationally. Opportunities to invest were expected to occur through corporate restructurings, mergers, acquisitions, privatizations and other strategic transactions.

In the event, the Fund made 8 investments during its commitment period, ranging in size from USD2m to USD10m. As of 31 December 2010, all but one investment had been exited. The core sponsors of the Fund were Capital Z, an affiliate of the Zurich Financial Services group and ABN-AMRO Asia Capital Investment. Investors in the Fund also included Norfund, FinnFund and the FMO .

Pranda JewelryPranda Jewelry
The first investment by the Fund was in Pranda Jewelry, Thailand’s leading integrated jewelry manufacturer and exporter. The Company, which was founded in 1972 and listed on the SET in 1990 encountered severe financial difficulties in the wake of the Baht devaluation in 1997, hit by a combination of exposure to foreign currency loans, a drop in demand and excessive inventory levels. Subsequently, the Company entered a lengthy restructuring process with debt rescheduling and debt write-offs. As part of this, creditors pressed for an increase in share capital.

In June 2001, SIF II acquired a 25% stake in Pranda through a private placement and appointed two representatives to the Board of Directors.

The Company meanwhile pursued an internal reorganization and renewed focus on its core strengths. As a result, earnings staged a strong recovery, reflected in a significant recovery in the share price.

The Fund began liquidating its investment in February 2003 and the position has now exited, completely.

Peace CanningPeace Canning (“Santiphab”)

Santiphab was established in 1958 to manufacture and distribute canned vegetables under the brand names “Nok Pirab” and “Pigeon”. Santiphab’s first production line was pickled cabbage. Santiphab has since grown to be the country’s leading manufacturer and producer of canned pickled vegetables and has extended its canned products to include fruits, fruit juice and seafood. In June 2002, Siam Investment Fund II (SIF II) invested Bt560m to acquire all Santiphab’s outstanding debts of approximately Bt3.0bn. The intention was to write down debt to a manageable level through a combination of debt forgiveness and a debt-equity swap. The remaining debt was then to be refinanced, returning the bulk of the investment cost to the Fund and leaving the Fund with a majority equity stake in the company. In July 2005, management of Santiphab took over management control of F&B Food Service, another SIF II investee company (see below). The move was aimed at (a) exploiting potential cost savings by bringing the two businesses together (b) replacing underperforming management at F&B and (c) providing Santiphab with a potential growth engine that would improve its listing prospects. Under the Fund’s eventual exit plan, Santiphab acquired ownership control of F&B and the original family shareholders of Santiphab bought out the Fund’s interests in the parent. The exit was completed in December 2010.


Sansiri, a listed real estate development company, was one of the first companies to complete a restructuring. In 1999, Starwood Capital joined as a strategic partner. Holding 7% of the equity initially, Starwood had an option to increase its stake to 51% through a warrant exercisable at Bt5. During 2002, the Sansiri shares traded as low as Bt3 and there seemed little prospect of Starwood exercising its warrant. This, in turn, hindered the Company's ability to operate satisfactorily. Management identified both the need for new capital and the need to cancel the warrant. Canceling the warrant was critical to the proposed recapitalization.

In August 02, SIF II subscribed to Sansiri's Bt 2,520 m (US$60m) capital raising. This capital represented 67% of the new equity base. At the same time, the warrant option arrangement with Starwood was terminated.

The fundraising transformed the Company's prospects, allowing it to proceed with a series of new housing projects at a time when housing demand was increasing rapidly. Sansiri is now recognized as a leading housing developer.

Following the private placement, there was a substantial re-rating of Sansiri shares and the Fund exited its position through sales in the secondary market.

F&B Foodservice (Thailand)F&B Foodservice (Thailand)

In October 2003, SIF II acquired a 76% stake in the Company and an existing shareholder loan and committed to management to invest further in expanding the business into a national franchise. Management was gifted a 24% stake. At the date of acquisition, F&B operated three warehouses (Bangkok, Laem Chabang and Had Yai). One new warehouse was added in 2004. The subsequent, financial performance overall, however, was disappointing. Though sales grew, the company experienced an unacceptable cash flow shortfall. In June 2006, management control was transferred to the management of Peace Canning and a plan devised to sell the F&B business to Peace Canning. At this point in time, the Fund's stake in F&B was 100%. The investment was exited along with Santiphab (see above) in December 2010.

Loxbit is a leading provider of IT services in Thailand, both in its own right and through a series of subsidiary and associate companies. Loxbit itself provides IT services targeted at the private sector while subsidiary PCC provides IT services targeting the public sector. Loxdata offers a full-service call center. Space Imaging Southeast Asia is a leading supplier of visual information products and services derived from space imagery and aerial photography. Through another subsidiary, Loxbit also owns a stake in CS-Loxinfo which was formed by a merger between the ISP subsidiaries of Loxbit and Shin Group.

SIF II acquired a 15% equity stake in Loxbit in 2001. In 2003, Mitsui & Co Ltd. bought a 7.5% stake in Loxbit which resulted in the Fund's stake being diluted to 13.9%.

The original intention was to exit the investment through the eventual listing of Loxbit on the Stock Exchange of Thailand. In the event, the shares were bought back by Loxbit and its parent Loxley in a series of transactions for cash and through a share swap (into shares of listed CS Loxinfo). The transaction was completed in April 2010.

Evason PhuketEvason Phuket

Deutsche Bank, Six Senses and SIF II acquired PIR in September 2001 and commenced an extensive improvement program to renovate PIR and re-brand it as an Evason Hotel – the five-star brand of the Six Senses Group. The rebranding was designed to improve significantly the income potential of the property. Though the renovation has indeed transformed the property, the Phuket tourism industry was rocked by a series of adverse advents, most notably the tragedy of the Tsunami in late 2004. From 2006, the performance of the resort picked. In 2007, the Fund received an offer for its stake from an investment consortium including the resort’s manager, Six Senses. The transaction completed in August 2008.

Siam PaperSiam Paper

Siam Paper was incorporated in 1967 to manufacture printing and writing paper. Its main product was uncoated white paper. Three machines were installed with a combined capacity of 22,000 tons per annum. In 1995, the Company started an expansion project, the PM#A-One Project, to produce coated paper (CWP), coated wood-containing paper (CWC), non-carbon required paper (NCR), and base paper for NCR (NCR-base), with a combined production capacity of 120,000 tons per annum. Due to the regional financial crisis and the negative effect it had on the Company, the PM#A-One project was suspended at 85% completion. The Company entered into debt restructuring and submitted the first rehabilitation plan in July 2001 with total outstanding debt before the Plan of Bt9,120mn. At the end of 2003, Krung Thai Bank (KTB) provided a refinancing package together with a loan to complete the PM#A-One Project. As part of the refinancing package, KTB required Siam Paper to raise Bt1,000m through a Private Placement and/or IPO. In October 22, 2004, Siam Investment Fund II (SIF II) invested Bt390m through subscribing for 52 million newly issued shares at a price of Bt7.5 per share (Par 5), representing 13.1% (post PP) and 10.4% (Post IPO) of the enlarged capital. As a condition of this investment, major shareholders agreed to include (a) 50% annualized return guarantee, (b) put option and (c) collateral as part of the investment terms with SIF II. Following the injection, the Company restarted the PM#A-One project and had a test run production of uncoated paper. However, the company continued to face difficulties in accessing sufficient funds to support working capital. Moreover, the anticipated listing was delayed. The investment team explored a wide range of financing options and potential tie-ups with strategic partners, however none of these initiatives reached a satisfactory conclusion and the Fund is currently pursuing a legal action against the family shareholders in relations to the put option that formed a part of the original terms of the transaction.


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