A discussion with Thailand Stock Guru Kittichai Taechangamlert on the Future of Bangkok Listed Siam Commercial New York Life.

On Saturday evening at our regular finance industry night I was joined by my friend and Thailand’s Stock Guru Khun Kittichai Taechangamlert.

For the last 4 years Kittichai Taechangamlert has been the The 7th major shareholder of Siam Commercial New York Life Insurance and one of the companies biggest supporters.

Background

Siam Commercial Bank Public Company Limited (“SCB”) and New York Life Insurance Company jointly announced on February 17, 2011 that they have signed a definitive agreement under which SCB will acquire all of New York Life’s and its Thai affiliate’s ownership stake in Siam Commercial New York Life Insurance Public Company Limited (“SCNYL”) for Thai Baht 8.4 billion (approximately $274 million) or about Baht 266.89 per share. The transaction is subject to customary closing conditions, including regulatory and SCB shareholder approval, and is expected to close in March, 2011. Formed by the partners in 2000, SCNYL is a joint venture among SCB, which owns 47.33%, and New York Life International, a subsidiary of New York Life that owns a 23.89% stake, and New York Life’s Thai affiliate, which owns a 23.44% interest. The remaining 5.34% of SCNYL is owned by public shareholders and, after the acquisition, SCB will own a 94.66% stake.

SCNYL, a market leader with over Baht 24 billion ($790 million) in net premium written revenue in 2010, generated impressive growth over the past 11 years and grew faster than the industry over that time period.

Khun Kannikar Chalitaporn, President of SCB, stated, “We thank New York Life for its many contributions as we worked together over the last 11 years to build a highly competitive life insurance operation in Thailand committed to serving the people of Thailand. SCB views life insurance as an important component of our long-term strategy that complements our banking franchise, and we see enormous opportunity in the Thailand life insurance sector. We plan to continue the operation’s superior growth while building on its reputation for financial strength and operational and service excellence. As always, SCB remains committed to providing exceptional service levels and enduring value to nearly 12 million customers nationwide.”

Dick Mucci, Chairman and Chief Executive Officer of New York Life International, LLC said, “Today, the joint venture operation with Siam Commercial Bank produces the majority of its sales through the bank distribution channel, and SCB is very interested in fully integrating the operation into its consumer banking platform, as it has done with all of their other bank operations. Given SCB’s strategic focus and business model, both partners believe that the time has now come for SCB to take control of the business and for New York Life to divest our stake.”

Mucci concluded, “New York Life is proud of the important role that SCNYL has played in Thailand’s economic development – by encouraging Thai consumers to save and plan for the future, through employment and capital investment, and by bringing best practices to the Thai life insurance marketplace. We wish SCB much future success with SCNYL. We now look forward to focusing our resources to maximize the value of our remaining international businesses where we will continue to invest in future growth and profitability to benefit our policyholders.”

The deal was closed without incident.

Kittichai Taechangamlert is more upbeat than ever on the future of the company “Finally, SCNYL ‘s minor shareholders see the light in the end of the tunnel.” he said on Saturday.

In the SCNYL ‘s AGM last week, there are some share holder raised the warrant for the share holders to alleviate the pain from the big lot a few months ago. Asking SCB to ignore the rights and bring the ignored warrants to allocate to all of the minor share holders.

He went on to say “The exercise price may be the same price that SCB bought from New York Life(266.89 baht) recently. The rights should be 9C :1 warrant, after SCB ignores the rights and these warrants will go to the minor shareholders with the right, 1C : 2.2W, and the warrants should be the call warrants which will be listed in SET, so any shareholders who do not have enough money to exercise can sell them.”

Kittichai Taechangamlert believes this will be the perfect solution for the all problems, such as the free float (will be more than 15%), the severe price drop recently due to the large block trades in putting the New York Life deal together.

“If the SCNYLs board approve this measure, we may see SCNYL make new high( above 618 baht/share) now that rumors of delisting will be eliminated.” said Kittichai Taechangamlert.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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Posted by Shayne Heffernan on May 4th, 2011and filed underAsia, Emerging Markets, Equities, Heffernan Capital Management, Latest News, Markets, Stocks, Thailand.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site