Thai Beverage is preparing to take its brewery business public on the Singapore Exchange in an IPO that could raise over US$2 billion. The firm behind Chang Beer is one of Thailand’s largest conglomerates and the IPO represents a stark contrast as the country’s economy struggles with the impacts of the pandemic and rising wealth inequality.
Drinks conglomerate Thai Beverage has announced that it will list its brewery business on the Singapore Exchange, in what would be the biggest initial public offering (IPO) on the market in 10 years.
The company produces Chang Beer and Sangsom rum, as well as Vietnam’s 333 and Saigon beers via a controlling stake in Vietnamese firm Sabeco.
ThaiBev also produces Chang in Myanmar in partnership with Shwe Than Lwin, a military-affiliated firm previously sanctioned by the EU and Australia, via a 28% stake in Singapore’s Fraser and Neave. ThaiBev and Fraser and Neave are both owned by Chinese Thai tycoon Charoen Sirivadhanabhakdi, the richest person in Thailand.
The sale of shares in the firm’s beer-making arm—called BeerCo Ltd—could raise US$2 billion, according to reporting by Bloomberg, making it the largest IPO on the exchange since Hutchison Port Holdings Trust’s in 2011, which raised $5.5 billion.
The public offering suggests a return to Thailand’s pre-pandemic streak of strong IPOs, despite the deep impacts of the pandemic on the country’s economy. Thailand’s already dire wealth inequality has only worsened under COVID-19; the economy contracted by 6.5% in 2020 and the number of people living on less than US$5.5 per day more than doubled in the first quarter of 2020 alone.
From 2015 to 2018, the number of Thais living in poverty increased from 4.85 million to 6.7 million, according to the World Bank. Though the government has dedicated over 1 trillion baht to economic relief, these efforts have fallen far short of what’s needed to support working classes.
This inequality is one underlying driver of Thailand’s ongoing pro-democracy protests, as organizers call for a revision of the political structures that allow ThaiBev and other conglomerates to continue lucrative growth while many Thais struggle with the impacts of the pandemic.
ThaiBev receives go-ahead to take brewery arm public
The company said on February 5 that it had received a “no-objection” letter from the Singapore Exchange Securities Trading regarding its plans to sell up to 20% of the shares in its beer business.
Market analysts say the move will provide a major boost to ThaiBev’s share prices as it represents a strong showing through 2020 and resilience in the face of the pandemic. In 2019, prior to the pandemic, ThaiBev reported 267 billion baht (US$8.9 billion) in sales revenue, 45% of which was from beer. For the fiscal year ending in September 2020, the company reported 253 billion baht (US$8.4 billion) in sales, 42% of it from beer.
“The potential listing of ThaiBev’s brewery unit could warm up Singapore’s IPO market and investors appeared to welcome the news,” said Margaret Yang, strategist for DailyFX, a trading news and research portal. The IPO would reportedly be managed by Citi, Bank of America and Morgan Stanley.
ThaiBev had announced its plans to take its beer business public in 2019 but was delayed due to the pandemic. The conglomerate as a whole went public on the Singapore Exchange in 2006, after protests against the public promotion of alcohol blocked an attempt to list on the Stock Exchange of Thailand.
Chang IPO shows Thailand’s “five families” are insulated from economic crises
ThaiBev owner Charoen Sirivadhanabhakdi belongs to one of the “five families” that control a dominant share of Thailand’s economy—the others being the owners of Charoen Pokphand (CP) Group, Boonrawd, King Power and Central Group.
With a net worth of around US$16.3 billion, Charoen is also the owner of TCC Group. The conglomerate’s property arm, Asset World, went public in 2019 and raised 41.7 billion baht (US$1.3 billion) in the year’s largest IPO. Asset World owns a number of luxury hotels and resorts and has said it will now use IPO funds to continue acquisitions, as the pandemic has pushed many of Thailand’s independent tourism businesses to the brink.
ThaiBev’s announcement comes amid the company’s renewed attempt to make inroads into Myanmar with Chang Beer. The joint venture with Shwe Than Lwin, known as Emerald Brewery Myanmar, began brewing Chang in late 2019.
The venture is the second time that ThaiBev and Fraser and Neave have partnered with Myanmar military-linked company, after a failed partnership with the infamous Myanmar Economic Holdings Limited (MEHL) ended in 2015. Shwe Than Lwin is owned by Kyaw Win, a prominent tycoon close to Myanmar’s last military junta as well as state-aligned Karen ethnic armed groups.
The impending IPO of ThaiBev’s beer business shows the conglomerate is confident in its continued growth despite its previous challenges in Myanmar and Thailand’s economic woes. Though the country has received international recognition for controlling COVID-19, its government has offered little support to help people weather the economic impacts of the pandemic.
Thailand’s pro-democracy protests have now targeted the country’s severe wealth inequality as one symptom of its political dysfunction, in part through critiques of the wealth of the monarchy. Thai King Maha Vajiralongkorn is one of the richest monarchs in the world, though accurate figures have never been made public. According to one estimate by Chris Baker, a Southeast Asia analyst who formerly taught at Cambridge University, Vajiralongkorn’s wealth is likely around US$70 billion.
The Crown Property Bureau, which manages the monarchy’s wealth, is the majority shareholder in the country’s second-largest bank, Siam Commercial Bank (SCB), as well as Siam Cement Group. The king also owns Siam Bioscience, a previously unknown firm now at the center of a controversy over Thailand’s COVID-19 vaccine acquisitions.