Thailand - Shin Corp & Temasek Holdings

Temasek to reduce stake in Shin Corp

Singapore’s Temasek Holdings plans to reduce its stake in Shin Corp, the Thai group it took control of more than two years ago, through a public offering of shares.

In a statement to the Stock Exchange of Thailand (SET) on Tuesday, Shin Corp said it was drafting a prospectus for an offering that would increase the minority shareholding, although it also said it would have to monitor the investment climate and sentiment in order to “conduct a successful offering...in the future”.

Shin Corp gave no details of a time-frame or size for such a deal.

In January 2006, Temasek paid $3.8bn, or Bt49 per share, for a 96 per cent stake in Shin Corp, the telecoms-to-aviation group founded by Thaksin Shinawatra, who was then Thailand’s prime minister.

The deal, Thailand’s largest takeover, triggered a crisis as Bangkok residents protested against the Shinawatra family’s $1.9bn tax-free profits from the deal. Critics accused the Singaporean state investment agency,of violating Thai laws limiting foreign ownership of telecoms companies to 49 per cent, though the deal replicated similar takeovers.

The furore culminated in the September 2006 coup and the seizure of most of the Shinawatra family’s earnings from the Shin Corp sale. The military government also vowed to investigate whether the takeover violated foreign investment laws.

Mr Thaksin is still battling to recover the money, but the Thai official spotlight on Temasek seems to have faded, partly owing to concerns about the repercussions of such a probe on other foreign groups operating in Thailand and partly due to the installation of a new elected government loyal to Mr Thaksin.

Shin Corp shares are trading at or Bt25 per share, a 35 per cent discount to their net asset value, reflecting the political changes in Thailand and Mr Thaksin’s fortunes since the purchase.

Andy Chan, a JPMorgan telecoms analyst, said it was unclear whether Temasek was serious about a near-term offering or was deflecting pressure from the Thai stock market, which requires listed companies to have a free float of at least 15 per cent. “It could be, ‘Yes they are really going to do it,’ or maybe they are just trying to make some statements here and there to get the SET off their back.”