Macquarie and TMB announced yesterday (April 27) that they are forming a new investment banking joint venture called TMB Macquarie Securities (Thailand). The new JV will focus on stock broking, equity research, equity capital markets, corporate finance, infrastructure funds management and retail broking.
For Macquarie, the JV will give it access to TMB's corporate and government contact list as well as exposure to the fast growing infrastructure sector in Thailand. "Together we'll form a formidable force in investment banking in Thailand," says Roy Laidlaw, head of Macquarie Securities.
For TMB the JV will give the bank access to investment banking skills and a broking license. The new retail broking business is being driven by TMB and will seek to leverage the bank's brand and branch network to get a slice of the large retail stock broking business. About 80% of the Thai equity market is in the hands of retail investors.
"This joint venture with Macquarie will create tremendous synergies with TMB's strong corporate relationships," says TMB's President and CEO, Dr. Subhak Siwaraksa. "Macquarie's global investment banking experience will allow us to provide stock broking, corporate finance and ECM services to our customers and offer them access to world-class, innovative products."
In particular the JV is looking to capitalize on the boom in Thai infrastructure spending announced in last week's budget.
The deal is being structured as a sale of 51% of Macquarie's existing Thai business to TMA for a price of Bt500 million over the net tangible asset value of the business. This business was acquired last year when Macquarie bought ING's cash equity business. Laidlaw says Macquarie will book a small profit on the transaction.
Although Macquarie is selling 51% of the company, the deal is structured as a true JV with three directors for the company being appointed from each side. The 51% sale was undertaken so it could be a Thai registered company. "We said when we bought the [ING] business that we wanted to be as local as possible throughout Asia," says Laidlaw. "We think a JV is the best way to do this in Thailand."
The deal is understood to have been in the offing since Christmas. Laidlaw says the negotiations went quiet for a few months and then came back strongly in the last month. Macquarie's man on the ground in Thailand, John Thompson, is understood to be the driving force behind the deal.