18 Jun 2014
SET-listed motorcycle leasing firm Group Lease Public Company Limited (GL) has taken over one of the leading leasing companies, Tanaban which is belonging to the Thai Credit Retail Bank in a strategic acquisition that will raise its total outstanding portfolio by more than 30% to about 6.2 billion Baht.
GL’s takeover of Tanaban, which is also enhancing existing motorcycle leasing plus “motorcycle for cash” and “used motorcycle finance”, has come at a crucial timing as the company’s main business in Thailand is turning around in light of the rapid economic recovery following last month’s military coup while its operations in Cambodia are also expanding aggressively.
“This is an important strategic takeover that will support our long-term growth,” GL’s chairman and chief executive officer Mitsuji Konoshita stated today (June 18) at an official ceremony at the Stock Exchange of Thailand where he signed the SSPA to acquire Tanaban with senior executives of Thai Retail Credit Bank.
GL in effect will take over Tanaban’s outstanding loans portfolio of about 1.5 billion Baht, which comprises mainly of motorcycle leasing plus “motorcycle for cash” and “used motorcycle finance”. Adding that to GL’s existing portfolio of about 4.7 billion Baht, the deal will push GL’s total portfolio to about 6.2 billion Baht.
Mr. Konoshita maintained that the deal represents a win-win transaction for both parties. The Thai Credit Retail Bank was able to dispose of a non-core asset while GL not only could enhance its main portfolio of motorcycle leasing but would now also be able to use Tanaban’s operating systems and clients network to expand into the potentially more lucrative other finance business.
From GL’s standpoint, the acquisition of Tanaban marks a giant step forward in its aggressive growth strategy. “Normally you would have to invest quite a lot in building up a portfolio this size,” Mr. Konoshita stated. “But in this case, we manage to take over Tanaban’s 1.5 billion Baht portfolio in one single exercise without any cost.”
One extra benefit for GL is a new window of opportunity to expand into the motorcycle for cash and used motorcycle finance business in the provinces by using Tanaban’s operating systems and existing network of clients and also their dealer networks.
GL had reported a substantial decline in net profits in the first quarter this year due to high provi-sions for bad and doubtful debts which were necessitated by late payments by clients owing to the politics-induced economic slowdown.
Mr. Konoshita noted that the performance of the company will be improved dramatically as now the surrounding environment has been changed in the route that benefits GL. Last month’s mili-tary takeover has marked a turning point which has changed GL’s fundamentals for the better since the National Council for Peace and Order (NCPO)’s swift action to revive the grassroots economy would directly advantage GL’s clients base.
The GL chief expressed confidence that the company’s performance will improve significantly in the second half this year not just because of the improved market conditions but also because of the extra positive impact from the acquisition of Tanaban.
The two parties have also agreed to offer generous treatment for all of Tanaban’s 400-plus staffs who will be fully welcomed by GL.
Meanwhile, the TCRB has adopted a new strategy to grow as a niche player bank focusing on small business and micro segment in Thailand since late 2012. Since then the portfolio of our Small Business segment has been growing rapidly within just over one year period. The bank also continue to grow its people and branches nationwide to expand the business.
TCRB owns 99.9% of the shares of TNB, and with this acquisition TCRB will sell all the shares of TNB to GL. This transaction is a good opportunity for TCRB to maintain its focus on our core busi-ness.
K. Winyou Chaiyawan, the CEO of Thai Credit Retail bank mentioned that this transaction will bring two highly competitive motorcycle financing businesses in the market together, creating an even stronger positioning and better future for the business. We believe that this acquisition and merger of TNB is a good potential for our customers, dealers and employees to grow. We believe that GL will be able to bring this business to the next level.
K. Winyou also mentioned that TNB asset is about 5% of the total TCRB asset. The divestment has minimal impact to the bank balance sheet. Our shareholders consider this as a good opportunity for us to divest TNB and to maintain our focus on Small Business Segments.
TNB has been in the market for more than 30 years with deep relationship with the dealers and focusing on new motorcycle financing business, with portfolio size of about 1.5 billion Baht. TCRB assets is currently about 27 billion Baht.