Thailand: Thai beer brewer launches up to 1.1 billion dollar IPO in Singapore

Brewer Thai Beverage PCL, whose plan for a share sale at home in Bangkok was blocked by buddhist monks, on May 19 launched a $1.1 billion Singapore IPO which could make it Southeast Asia's biggest listed brewer, Reuters reports.

Thai Beverage, whose Beer Chang and Mekhong whisky are top sellers in Thailand, said it will stick to its initial price range of S$0.26-S$0.36 per share, which some say is on the pricey side given current market conditions.

This week's global share price slide led ING Investment Management Asia Pacific to scrap a planned equity fund IPO while Pacific Shipping Trust revised down its IPO price.

Thai Beverage is offering 4.89 billion shares, which would value the IPO at as much as S$1.76 billion ($1.12 billion) and make it Singapore's biggest IPO since the S$4.2 billion ($2.68 billion) flotation of Singapore Telecommunications Ltd. , Southeast Asia's largest phone firm, in 1993.

Thai Beverage has 60 percent of the Thai beer market and 74 percent of the spirits market in the country of 63 million.

It wants to add to its three breweries and 16 distilleries to drive further sales in neighbouring Cambodia and Laos.

Ueychai Tantha-Obhas, Thai Beverage senior vice president, told a briefing delivered to Singapore via video conference the firm planned to become Southeast Asia's biggest beverage company within five years as it moves into new markets in Vietnam, the Philippines and Taiwan.

At present, international sales make up less than one percent of the total, but its sponsorship of English Premier League football club Everton, on whose blue shirts the Chang beer logo appears since 2004, indicate its ambitions.

"We would like to defend our own territory in the domestic rural beer and spirit markets. We also want to expand in the premium market," he said from an investor roadshow in New York.

The firm also plans to use the cash raised in its IPO to repay part of its $965.7 million debt.

Half of the Thai Beverage shares sold would be new shares, raising net proceeds of about S$841.5 million, based on the maximum price of S$0.36, or as much as S$1.1 billion if an over-allotment option is fully exercised.

The remaining shares to be sold are owned by the family of liquor tycoon Charoen Sirivadhanabhakdi.

Thai Bev has had a rocky ride to listing. Last year in July thousands of Buddhist monks and other anti-alcohol campaigners brought Bangkok's traffic to a halt in protests demanding it refuse to list the firm.

Sithichai Chaikriangkrai, senior vice president and director of accounting and finance, said the firm was still open to a second listing at home, given the opportunity.

Based on a S$0.36 per share pricing, the IPO would value the firm at S$8.8 billion ($5.58 billion), or about S$9.1 billion ($5.77 billion) if the over-allotment is fully exercised.

That would give the Thai brewer a market cap bigger than San Miguel , the Philippines' second-largest company and currently Southeast Asia's largest food and drinks group, with a market cap of $4.74 billion. It would also dwarf the $1.78 billion market cap of Singapore-listed Asia Pacific Breweries (APB) , maker of Tiger Beer.

Japan's Asahi Breweries is worth $7.2 billion, China's Tsingtao Brewery $1.89 billion.

Analysts say Thai Beverage will be a play on Southeast Asia's fast-growing consumer market, but its shares are not cheap.

In 2005, the firm had a net profit of 10.5 billion baht ($278 million) on 92.1 billion baht in sales, which at S$0.36 would value it at over 20 times historical earnings based on the top of the pricing range.

"For a food and beverage company, the valuation is very rich. The sector is quite defensive and people would normally be looking at much lower PEs," a Singapore trader told Reuters.

Deutsche Bank, J.P. Morgan and Merrill Lynch are the issue managers for the IPO, as well as the underwriters, together with DBS Bank. DBS is also the lead manager for the Singapore offer.

The offer closes on May 23 for Singapore, and a day later for the international portion. Trading is due to begin on May 30.

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