Shopping spree
Thai retail chain Ek-Chai Distribution System, or Lotus’s, sold a record-setting baht deal in 2023, raising Bt31.5bn (US$902m) just six months after its previous fundraising with a more successful issue, making it the standout Thai Capital Markets Deal of the Year.
Lotus’s is a well-known name in Thailand, as the company operates a range of supermarkets and is part of CP All, which operates the country’s 7-Eleven stores. It was reacquired from Britain’s Tesco in 2020, and subsequently dropped the Tesco part of its name. The rebranded borrower hit the market at the end of 2022 with a Bt23.5bn four-tranche bond, but the transaction fell short of the maximum target of Bt30bn as the market conditions were poor at the time.
The company readied a quick return to the market just a few months later as it wanted to refinance bridging loans taken for the acquisition with lower-cost debt.
In April, Lotus’s came back to the market with a different approach. While the 2022 deal had been offered to high-net-worth investors, the new transaction was a public offering, drawing on Lotus’s name recognition with retail investors.
The issuer still needed to market itself thoroughly and explain its business to get investors on board. That work was a resounding success, as retail investors eventually took 53% of the notes. Demand from institutions and cooperatives was strong, too.
The transaction, rated A+ by Tris, was split between a Bt7.8bn 2.8% 1.5-year bond, a Bt10.37bn 3.2% three-year, a Bt5.36bn 3.54% five-year, a Bt1.11bn 3.83% eight-year and a Bt6.85bn 4% 10-year. The average tenor was notably short, and a 1.5-year tenor is not common in Thailand. But the bias toward shorter-dated maturities met investor appetite, as many buyers in Thailand were nervous about liquidity and default risks in the domestic bond market at the time. Pricing came at the tight end of guidance for the 1.5, three and 10-year tranches.
Demand was so strong that Lotus’s was able to raise more than the minimum Bt25bn it had planned, utilising the Bt6.5bn greenshoe in full. The huge fundraising was the biggest baht offering of 2023 and meant that Lotus’s had raised Bt55bn from the bond market within a six-month period, demonstrating its ability to find optimal pockets of liquidity and enabling it to reduce its overall cost of debt.
Bangkok Bank, Bank of Ayudhya, Kasikornbank, Kiatnakin Phatra Securities, Krungthai Bank, Siam Commercial Bank, TMB Thanachart Bank and United Overseas Bank (Thai) were joint lead managers for the retail and institutional portions, while CIMB Thai Bank was joint lead only for the retail portion.
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