Eastspring Investments, the Asian asset management business of UK insurer Prudential Plc, has signed a preliminary agreement with Thanachart Bank to acquire an unspecified controlling stake in Thanachart Fund Management (TFund).
It will be Eastspring's second acquisition in the Southeast Asian country after it entered Thailand last September with the purchase of a 65% stake in TMB Asset Management – now TMBAM Eastspring – from TMB Bank.
The company says in a filing to the London Stock Exchange that it expects to sign a definitive agreement on the new deal by the end of the year. It did not disclose the price for the stake.
The acquisition is "contingent on completion of the merger of Thanachart Bank and TMB Bank Public Co Ltd", according to the August 12 filing. The 156 billion baht (US$5.06 billion) merger of the two banks is the largest deal in Thailand’s corporate history.
Separately, Thanachart Bank says if the stake sale cannot be completed prior to the merger, TFund will first be transferred to TMB Bank, and the merged bank will complete the sale after the union. The Thai lender provided the additional details in a slide presentation to analysts, also on August 12.
According to a fund manager at a foreign asset management firm in Malaysia, the acquisition of TFund will turn Eastspring into a "serious top five player" in Thailand's asset management industry.
"Scale really matters in this business. The acquisition, when completed, could better position [Eastspring’s Thai business] in terms of attracting institutional mandates as well as products distribution to retail investors," the Kuala Lumpur-based fund manager tells Asia Asset Management, speaking on condition of anonymity.
“With middle income population rising, and Thailand’s political stability post [the recent] general election, I expect competition in the fund management space in the country to become more intense,” he says.
Figures from Thailand's Association of Investment Management Companies show that TMBAM Eastspring had a 7.52% market share and 380.24 billion baht of assets under management at the end of 2018, while TFund had 3.79% market share and 192.66 billion baht of assets.
Their combined share puts the two companies in fifth spot, behind Krung Thai Asset Management Public Co, Thailand’s fourth largest asset manager, which had a 11.98% market share and 605.79 billion baht of assets in 2018.
Singapore-based Eastspring had US$193 billion of assets under management at the end of 2018.