SINGAPORE/HONG KONG General Electric Co has hired Morgan Stanley to review its 33 percent stake in Thailand's Bank of Ayudhya Pcl, which could potentially lead to a sale by the U.S. conglomerate of its near $2.2 billion holding, sources familiar with the matter said.
The stake sale has been a constant source of media speculation since GE (GE.N) started to shrink its businesses. This is the first time the company has formally given a mandate for a review, underscoring the seriousness with which it wants to explore its options.
GE acquired the Bank of Ayudhya (BAY.BK) stake in 2007, investing 22.3 billion baht, or $626 million based on the then exchange rate, in Thailand's No.5 lender.
It was unclear when GE would launch a formal auction, if at all, sources said, declining to be identified as the discussions were confidential. Morgan Stanley (MS.N) was unavailable for comment, while GE did not reply to an e-mail seeking comment.
GE, which has a market capitalisation of $233 billion, has been selling non-core businesses under Chief Executive Jeff Immelt, and the review of the Thai bank stake is part of the overall restructuring, the sources said.
The U.S. conglomerate initially acquired a 25 percent stake in the Bank of Ayudhya for 16.00 baht a share in 2007 and subsequently raised the stake to nearly 33 percent. With the Bank of Ayudhya shares trading at 35.25 baht, GE has more than doubled the value of its investment.
If auctioned, the stake could attract interest from Southeast Asian banks, as well as Australian, South Korean and Japanese banks, sources said.
Thailand limits foreign ownership in domestic banks at 49 percent, but buyers can negotiate with the central bank and the government if they want to own more than that.
"Anyone who is interested in commercial banking in Thailand will be interested in this stake," said a source with direct knowledge of the deal.
Thailand's rapidly growing economy and relative political calm after the general elections in July 2011 are seen as the factors luring foreign banks to the Southeast Asian economy.
GE's review of the Bank of Ayudhya stake comes as ING Groep NV (ING.AS) explores the sale of its 31 percent holding in Thailand's TMB Bank Pcl (TMB.BK), valued at around $756 million.
ING, which is selling assets to help repay a 2008 rescue by the Dutch government, has also hired an investment bank to help find a buyer for its TMB Bank stake, the sources previously told Reuters.
ING bought the stake in Thailand's seventh-largest lender in 2007 for 460 million euros ($607 million). The Thai government also owns 26.1 percent of TMB, and had said in the past that it wants to sell its entire stake.
($1 = 30.7500 Thai baht)
(Reporting by Saeed Azhar and Denny Thomas; Editing by Ryan Woo)