Friday, October 26, 2012

Group Lease eyes acquisitions in Vietnam and Indonesia

Group Lease, a motorcycle-leasing firm listed on the Stock Exchange of Thailand, plans to acquire medium-sized to large leasing companies in Vietnam and Indonesia, as both countries offer excellent business opportunities due to their large and fast-growing motorcycle sales volumes.

GL chairman and chief executive officer Mitsuji Konoshita yesterday said the company had turned to those markets after seeing that sales had been growing more rapidly than in the Kingdom.

The company expects each acquisition to cost about Bt4 billion, he said.

The funding sources for the deals will be loans from a financial house in Singapore, where the cost of funds is lower than from financial institutions in Thailand.

Moreover, the company is looking to securitisation as well as a capital increase, as it has a low debt-to-equity ratio of 0.69, he said.

"We are also studying business expansion into Laos and Myanmar," he added.

GL's present business network is concentrated in Thailand and Cambodia.

"The Cambodian market is particularly promising because we were the first company to start up a motorcycle-leasing business there," Konoshita said.

GL has forged a Cambodian partnership with Honda NCX to provide financing services to the customers of all dealerships of the market-leading Honda brand. "This means GL will provide financing for all Cambodian consumers walking into any Honda shop," he said.

Cambodia's huge potential is underscored by the country's growing economy and low per-capita motorcycle ownership. Roughly one in eight Cambodians owns a motorcycle today, but the ratio could easily narrow to one in four in a few years' time. GL, through its wholly owned GL Finance subsidiary in Cambodia, is best suited to capture this colossal growth potential, said the company chief.

In Thailand, GL has a portfolio of more than 100,000 leased motorcycles, which it aims to double within three years. In Cambodia, the company plans to increase its portfolio to about 300,000 units, also within three years.

With projected sales growth in Thailand and Cambodia, plus the likely acquisitions in Vietnam and Indonesia, the combined target is to expand the portfolio to about 1 million units by 2015, Konoshita said.

GL has outstanding loans of Bt1.9 billion in Thailand.

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