General Electric Co. (GE) is considering options including a sale of its $2.2 billion stake in Bank of Ayudhya Pcl (BAY), Thailand’s fifth-largest lender, said two people with knowledge of the matter.
GE may contact potential buyers including Malayan Banking Bhd., said one of the people, who asked not to be identified as the deliberations are private. GE owns 33 percent of Bank of Ayudhya, which has a market value of 206.5 billion baht ($6.7 billion), data compiled by Bloomberg show.
Chief Executive Officer Jeffrey Immelt is shrinking the GE Capital unit after $32 billion of credit losses in the financial crisis. GE has sold at least $3.9 billion of assets so far this year, data compiled by Bloomberg show. The largest deal was the $2.5 billion sale of Business Property Lending Inc. to EverBank Financial Corp, announced in July.
“GE could receive a very good price from this sale,” said Sasikorn Charoensuwan, the head of research at Phillip Securities (Thailand) Pcl. The Fairfield, Connecticut-based company would get “strong interest for its stake.”
GE, whose businesses range from GE Capital to making jet engines and refrigerators, gained 1.4 percent to $21.89 at the close in New York, the highest since October 2008. Bank of Ayudhya jumped 6.3 percent today to close at the highest since November 1997.
The lender’s stock has more than doubled since GE first invested $584 million in Bank of Ayudhya in January 2007, paying 16 baht a share. Maybank (MAY), which last year acquired Singaporean brokerage Kim Eng Holdings Ltd., has said it would consider buying a Thai lender.
Bank of Ayudhya trades at 1.9 times book value, higher than the average of 1.71 times among publicly traded Thai banks, according to data compiled by Bloomberg. The stock closed at 34 baht in Bangkok, taking gains this year to 55 percent.
“We regularly evaluate our strategic options for our investments,” GE Capital said in an e-mailed response to questions from Bloomberg News. “In the meantime, we continue to work closely with the Bank to strengthen its business franchise.”
A Maybank official declined to comment.
Maybank, Malaysia’s biggest lender, will consider buying a retail bank in Thailand to expand its operations in Southeast Asia, CEO Abdul Wahid Omar said in August last year. Maybank bought Kim Eng for $1.4 billion in 2011, and has also made investments in lenders in Vietnam and Pakistan.
“It would be good for Maybank if it’s true as it will give them a foothold in Thailand,” Lim Sue Lin, an analyst at HwangDBS Vickers Research Sdn., said of a possible purchase of Bank of Ayudhya. The Thai lender “is a good bank.”
Since GE’s investment, Bank of Ayudhya has expanded its retail banking business by acquiring credit card and consumer loans businesses from GE Capital, American International Group Inc. (AIG) and HSBC Holdings Plc. (HSBA) The lender’s net income jumped 23 percent to 7.13 billion baht in the first half from a year earlier.
Thailand’s economy has recovered this year as consumption rebounded following last year’s floods, and the government forecasts growth will reach 6 percent for 2012. Loan expansion accelerated to 14.2 percent in the second quarter and non- performing debts fell, according to Bank of Thailand.
Among 34 analysts covering Bank of Ayudhya, 20 rate the stock a “buy,” 13 have a “hold” recommendation and one advises investors to sell the shares, data compiled by Bloomberg show.
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