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Siam Investment Fund II L.P.
Siam Investment Fund II L.P. is a limited partnership established in December 2000 with total commitments of $ 57 m. The Fund's term is 10 years with a commitment period of five years. The commitment period has now ended.
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. Two investments have been exited successfully A third exit and a partial fourth exit are anticipated in 2H 2007.
The core sponsors of the Fund are Capital Z, an affiliate of the Zurich Financial Services group and ABN-AMRO Asia Capital Investment. Investors in the Fund also include Nor fund, Finn Fund and the FMO.
| Pranda 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.
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| Peace Canning |
Peace Canning has projected sales of Bt1,135mn (US$33m) in 2007 and projected earnings before tax of Bt58m (US$1.7m). The Company is planning to list on the SET in late 2008.
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| Sansiri |
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.
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| F&B Foodservice (Thailand) |
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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 intention is to exit the investment through refinancing the shareholder loan and swapping shares with Peace Canning, which aims to list in late 2008
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Loxbit |
| Loxbit is 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. Alternative exits are also being considered.
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| Evason Phuket |
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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.. I the past 12 months, there have been encouraging signs of a strong recovery in tourist arrivals and the resort is performing well. At the same time, negotiations are underway to sell the resort. An exit from this investments is expected in late 2007.
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| Siam Paper |
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Since the injection was made, the Company has restarted the PM#A-One project and has test run production of uncoated paper . At this point in time, however, the company is facing difficulties in accessing sufficient funds to support working capital. Meanwhile, the anticipated listing has been delayed. The investment team is actively asisiting management to secure alternative funding sources and progress it is expected that commercial production will start in 2H 2007.
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Future Investments
The Fund's commitment period will end in November 2005. Future investments will be undertaken by the successor fund Siam Investment Fund III L.P.
Please click the links below to download our Annual Reports.
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