Thursday, September 20, 2007

Major Thai agribusiness to do IPO

AGRIBUSINESS / INITIAL PUBLIC OFFERING

After 40 years, Betagro to list on SET in 2008

WALAILAK KEERATIPIPATPONG

Betagro, one of Thailand's major agricultural groups, has celebrated its 40th anniversary by announcing plans to list on the Stock Exchange of Thailand next year to help raise funds for the expansion of its food and farm businesses.

The listing application would be filed this year to take advantage of incentives offered by the Securities and Exchange Commission.

Market regulators recently confirmed that companies filing this year for a listing on the SET next year will be eligible to have their corporate tax rate of 25% instead of the normal 30% rate. Companies listing on the MAI will pay 20%.

Group chief executive Vanus Taepaisitphongse said that another objective was to increase Betagro's professionalism as a major specialist in the chicken and pork business.

Currently, only two chicken producers are traded publicly, Charoen Pokphand Foods and GFPT Plc.

''In the first 40 years, we have engaged mainly in upstream industries _ producing feeds, farming, and making food. Now we'll take another step forward _ focusing more on downstream businesses, high-standard ready-to-eat meals and effective marketing and distribution,'' he said.

The Betagro Group comprises 29 wholly owned and joint-venture companies in the agricultural and food industry.

The proposal for the share listing has been prepared by Phatra Securities. The amount of funds to be raised was not revealed but part of the capital would finance investment projects worth 3.1 billion baht in 2008 and 2009, said chief operating officer Vasit Taepaisitphongse.

The new investments, mainly to build more chicken-processing and food-production plants, would ensure the company meets its annual revenue growth projection of 10% to 15% over the next five years from around 33 billion baht this year.

Revenue from the domestic market would still contribute the largest portion to Betagro, at around 75% and the balance would come from exports. The poultry business and the regional and feed business would continue to be the major contributors of 40% each to total revenue.

Group chief financial officer Siriwan Intarakumthornchai said that after the stock listing, Betagro's debt-to-equity ratio would drop to two times from six to seven now.

In addition to the listing announcement, Betagro yesterday launched a brand-building concept under the theme ''Let's Make Life Better''. It aims to consolidate the marketing expertise in the agricultural and food industry of the company, which started business 40 years ago as a small supplier of raw materials for animal feed near the now-defunct Bankok Metropolitan Bank in the Suan Mali area in Bangkok before expanding into a major feed and chicken producer and exporter.

But the financial crisis in 1997 and bird flu in 2003 led Betagro to restructure its businesses comprehensively, aiming to modernise its operations and increase competitiveness.

At least two management systems, total quality management (TQM) and total productivity management (TPM), have been implemented to raise productivity and trim operating costs.

Mr Vanus said building business partnerships among farmers, traders and foreign investors was on the company's agenda to create win-win strategies.

Currently, Betagro deals with tens of thousands of chicken farmers and hundreds of traders who distribute its products. It also runs ventures with five giant Japanese corporations: Mitsubishi Corporation, Sumitomo Corporation, Ajinomoto Inc, Dainippon-Sumitomo Pharmaceutical Co and Ootoya Co.

After the listing and brand-building efforts, Mr Vanus said Betagro would have a clear position and should not be compared with the giant CP Group.

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