* Khazanah competing against Japan's MUFG - sources
* GE plans to select a preferred bidder soon - sources
* Thailand's so-called single-presence policy an obstacle
By Saeed Azhar and Taiga Uranaka
March 15 Malaysia's Khazanah Nasional Bhd is
seeking to buy General Electric's $1.8 billion stake in Bank of
Ayudhya (BAY), sources familiar with the matter said,
pitting it against Japanese banking giant Mitsubishi UFJ
Financial Group (MUFG).
Khazanah's bid for GE's 25.3 percent stake came as a
surprise, the sources said, declining to be identified as the
information was not public.
The proposed acquisition would be the largest purchase of an
overseas banking asset by Khazanah as it plays
catch-up with Singapore state investor Temasek Holdings Pvt Ltd
. The Malaysian sovereign wealth fund currently manages
a portfolio that is just a quarter of the $158 billion of assets
held by its neighbouring rival.
Khazanah had in the past shied away from taking large
banking stakes overseas, focusing on healthcare assets in
Singapore and Turkey as well as real estate deals. The bid for
GE's stake would mark a shift in Khazanah's strategy.
A successful acquisition of the stake in BAY would bring
Khazanah closer to Temasek in terms of investment approaches.
The Singapore state investor already owns sizable shares in
Standard Chartered PLC, China Construction Bank Corp
and Indonesia's Bank Danamon.
The Malaysian state investor is acquiring assets in
neighbouring emerging markets as the outlook for Southeast Asian
economies remains resilient in the face of global economic
Some analysts say Thailand is witnessing its best investment
cycle in 20 years.
BAY, which has a market value of nearly $7 billion, is the
leader in the Thai retail and consumer lending sector. It is
also Thailand's fifth-largest lender.
General Electric Co is selling its remaining 25.3
percent stake in BAY as it divests non-core assets across the
Officials from Khazanah and GE declined to comment.
The Malaysian state investor is also picking up insurance
Khazanah, which owns a nearly 30 percent stake in Malaysia's
second-biggest bank CIMB Group Holdings Ltd, recently
teamed up with Sun Life Financial Inc to buy a 98
percent stake in an insurance joint venture between CIMB and
This week, Khazanah made a preliminary bid to acquire a $500
million stake in unlisted Thai Life Insurance Co Ltd.
GE is trying to finalise a preferred bidder for the BAY
stake soon, but the deal is facing regulatory bottlenecks, the
MUFG, which banking sources saw as a frontrunner in
this race, wants to keep its branch in Bangkok even if it buys
the stake in the Thai lender, something that Thailand's
single-presence policy restricts, said sources with direct
knowledge of the matter.
MUFG does not disclose much on individual country
operations, but says core unit Bank of Tokyo-Mitsubishi UFJ's
outstanding loans in Thailand stood at $7.9 billion as of the
end of September, more than half of which to Japanese
corporations with operations there.
The bank opened its Bangkok branch in 1962.
Foreign banks are keen to boost their presence in Southeast
Asia's booming economies, but regulatory obstacles have made
A $7.3 billion takeover bid by DBS Group Holdings
for PT Bank Danamon is still stuck with Indonesian
regulators 10 months after Singapore's biggest bank agreed to
buy Temasek's controlling stake in Indonesia's sixth-biggest
bank. Temasek owns about 29 percent of DBS.
BAY's sale process began late last year with the appointment
of Morgan Stanley as a sell-side adviser.
GE bought a stake of about 33 percent in BAY in 2007 for
22.3 billion baht, or $626 million based on the exchange rate at
In September, GE sold a 7.6 percent stake in the Thai bank,
raising about $466 million.
GE has been selling non-core businesses under Chief
Executive Jeff Immelt, with the sale of the Thai bank stake part
of the overall restructuring.