A unit of Singapore's state investment arm, Temasek Holdings, has sold its 23 per cent stake in Indonesian petrochemical maker Chandra Asri Petrochemical to Thailand's largest industrial conglomerate for about $318m, another sign of the race for petrochem assets in the region.
Siam Cement, through its wholly-owned unit SCG Chemicals, will buy the 23 per cent stake held by Apleton Investments, as well as an additional 7 per cent, valued at $99m, from Barito Pacific, the majority shareholder in Chandra Asri. The deal is expected to be completed by the end of the month.
Barito, a diversified company with interests in petrochemicals, forestry, mining and energy, will hold more than 59 per cent in Chandra Asri and remain the controlling shareholder.
Chandra Asri is Indonesia's sole cracker operator, and produces polyethylene, polypropylene and other olefins products.
For Siam Cement, its biggest overseas investment to date will give it a foothold in Indonesia's petrochemicals industry, as well as a larger presence in the region.
"This Investment represents a unique opportunity for SCG Chemicals to invest in Indonesia’s leading petrochemicals franchise, with highly attractive market growth dynamics," SCG said in a filing to the Thai stock exchange.
SCG Chemicals, the largest producer of chemicals in Thailand, has joint ventures with large global firms, including Mitsui Chemical, Dow Chemical and Mitsubishi Rayon.
Siam Cement, which competes with state-owned energy group PTT Plc, recently acquired an Indonesian ceramics manufacturer, and has stated its intent to expand in the region, with investments particularly in Vietnam, the Philippines and Indonesia. It has said it plans to invest nearly $5bn over 2011-15, mostly in acquisitions.
Siam Cement is 30 per cent owned by the Thai royal family's Crown Property Bureau, and has also said it was interested in buying Sulfindo Adiusaha, a chemical producer controlled by Indonesia's Tanojo family, in a deal that could be worth about $700m. It also has plans for a $4bn petchem complex in Vietnam.
Separately, South Korea's Hanwha Chemical Corp said it had dropped its bid for Sulfindo Adiusaha without saying why. Action in petrochemicals is heating up, with companies in Singapore, Thailand and Malaysia planning big expansions.
Cash-rich Thai companies are looking for growth and acquisition opportunities in the region, and Indonesia makes an obvious choice: Indonesia accounts for nearly 30 per cent of inbound M&A volume in southeast Asia so far this year, with $6.5bn from 148 deals, according to Dealogic estimates.