Gulf Energy Development (Gulf) has become the fifth-largest shareholder in Kasikornbank (KBank), Thailand’s third-largest lender by asset value, in a move that sparked speculation that the energy giant may replicate its takeover of Intouch Holdings (INTUCH).
According to the Stock Exchange of Thailand (SET), Gulf currently holds 77 million shares in KBank, making it the bank’s No.5 shareholder with a 3.25% stake.
The four largest shareholders are Thai NVDR Ltd (15.42%), State Street Europe Ltd (7.51%), South East Asia UK (Type C) Nominee Ltd (4.83%) and the Social Security Office (3.40%).
Based on KBank’s share price of 157.50 baht as of March 19, Gulf is expected to spend 12.12 billion baht for the transaction. With the latest share acquisition, Gulf is expected to receive a dividend payment of 808.50 million baht from KBank.
KBank executives said the increased shareholding by Gulf is part of the shareholder’s “normal portfolio investment”. The bank offered no specific information regarding the timeline of this increase.
KBank shares rose 2.22% to reach 161 baht by midday yesterday, while Gulf was up 1.96% to 52 baht.
Bualuang Securities (BLS) said Gulf’s investment in KBank sparked speculation it may plan a redux of its takeover of INTUCH.
While Gulf publicly stated its investment in KBank is purely for trading and dividend income, any further accumulation of shares would signal a deeper strategic ambition, said the brokerage.
“Gulf stands to gain financially from its KBank investment, leveraging its lower funding costs and enhanced equity base following its INTUCH merger,” said BLS analyst Kijapat Wongmetta.
With its 3.25% stake, analysts estimate a modest 1.2% increase to Gulf’s 2025 earnings. If Gulf successfully acquires a 30% stake, the potential earnings upside could soar to 43%, he said.
NORMAL INVESTMENT
Sarath Ratanavadi, chief executive of Gulf, said the share purchase in KBank is a normal investment that involves the “buying and selling” of stocks.
He was responding to questions from the Bangkok Post requesting clarification of the company’s motivation.
Regarding whether Gulf bought shares for price speculation, and not to expand its shareholding in KBank over the long term, Mr Sarath declined to answer.
Gulf’s investment in KBank is similar to any investor that buys the bank’s shares because they are healthy assets that promise high yields, said Yupapin Wangviwat, chief financial officer of Gulf.
KBank stock has high liquidity, with a low price-earnings (P/E) ratio and high dividends, she said.
Gulf will consider selling the stocks if their prices increase. Oppositely if their value falls, the company will carefully assess the market situation before taking a decision.
“We aim to gain benefits from this investment, and we already earned 808.5 million baht,” said Ms Yupapin.
POSSIBLE SYNERGIES
Suwat Wattanapornprom, head of the research division at Krungsri Securities, said Gulf’s increased ownership of KBank supports the energy firm’s strategy to expand to virtual banking.
“To operate a virtual bank, you need to have adequate data and artificial intelligence related to the business. This is what the partnership with KBank can provide for Gulf,” he said.
Gulf, one of Thailand’s largest power producers, recently joined hands with telecom giant Advanced Info Service and Krungthai Bank to apply for a virtual bank licence from the Bank of Thailand.
Five groups applied and the successful applicants are expected to be announced by the middle of this year.
“Gulf’s executives said this investment is for liquidity management and the share price is worth the investment. The potential synergies could be seen in the company’s next move, but we think this partnership could pave the way for something both sides can do together in the future,” Mr Suwat told the Bangkok Post.
Given the capital increases Gulf made before its INTUCH acquisition, including a 32-billion-baht equity issuance and a debt expansion of 100 billion baht, similar strategies could be in play now, noted the brokerage.
After the INTUCH move, Gulf’s debt overhead is expected to rise significantly to 800 billion baht, giving it substantial firepower for further acquisitions, he said.
With regulatory hurdles for majority ownership of KBank and Gulf’s vast remaining debt capacity, analysts believe KBank is unlikely to be Gulf’s final target.
Instead, the company may want a low P/E ratio and recurring-income assets with strategic synergies, particularly in the renewable energy and infrastructure sectors, said BLS.
On Monday, KBank notified the SET it will propose a special dividend payment for approval at an extraordinary general meeting of shareholders on May 7. The proposed payout is set at 2.50 baht per share.
While Gulf previously denied rumours regarding acquisition of KBank, Mr Suwat said analysts are monitoring Gulf to see whether its purchase is the beginning of a broader expansion strategy.