HONG KONG (Reuters) - General Electric Co (GE) (GE.N) sold about a quarter of its stake in Bank of Ayudhya (BAY.BK) under a global plan to shed non-core assets, after the value of its five-year investment in what is now Thailand's most profitable bank more than doubled.
The U.S. conglomerate sold a 7.6 percent stake in the bank in a block trade to institutional investors, GE Capital, a unit of GE, said on Wednesday, confirming an earlier Reuters story. That cut GE's share in the lender to 25.3 percent.
GE's stake in Thailand's No.5 lender is now at a level where potential buyers of its remaining share would not have to make a mandatory general offer for Bank of Ayudhya. Also, foreign banks eyeing the stake would not need central bank approval.
"The sell-down smoothens GE's exit from the Thai bank. It also gives GE the flexibility to sell its remaining stake to a strategic buyer who is happy with owning a minority stake," one person familiar with situation said, declining to be identified because details of the plan were confidential.
Thailand's rules prohibit foreign banks from owning more than a 49 percent stake in domestic banks, which was seen as a deterrent to lenders such as New Zealand Banking Group (ANZ.AX) and Malayan Banking Bhd (MBBM.KL) from buying the GE stake, sources said.
Maybank, ANZ and some domestic Thai lenders were among the suitors whom GE approached after the U.S. conglomerate hired Morgan Stanley (MS.N) to review its 32.9 percent stake, sources previously told Reuters.
Bank of Ayudhya, ANZ and Maybank declined comment.
"Having run all its options, GE might have come to the conclusion that it's best to take some money off the table," said another source familiar with the process.
GE has agreed not to sell any more Bank of Ayudhya shares in the market for the next six months, though it could offload its remaining 25.3 percent stake to a strategic buyer, the bank said in a statement on Wednesday.
As of the end of the second quarter, Bank of Ayudhya's net interest margin, a gauge of profitability, stood at 4.3 percent, the highest among Thailand's banks.
GE has been selling non-core businesses under Chief Executive Jeff Immelt, and the review of the Thai bank stake is part of the overall restructuring. Earlier, a source with direct knowledge of the matter told Reuters that GE sold a stake in Bank of Ayudhya for $466 million.
"GE Capital continues to review strategic options for its remaining interest in BAY," GE Capital said in the statement.
GE agreed to buy a stake in Bank of Ayudhya in 2007, and in total invested 22.3 billion baht, or $626 million based on the then exchange rate.
The firm initially acquired a 25 percent stake for 16.00 baht a share and later raised it to nearly 33 percent.
GE sold the stake at 31.30 baht per share, a source said on Wednesday, declining to be identified as the details of the sale were not public yet. That represents a 5.9 percent discount to the stock's closing price on Tuesday.
With Bank of Ayudhya shares trading at 35.25 baht, GE has more than doubled the value of its investment.
GE's investment rejuvenated Bank of Ayudhya, which had remained undercapitalised after the Asian financial crisis in the late 1990s. The U.S. conglomerate subsequently moved the bank's focus to consumer lending, lifting its earnings.
On Wednesday, the bank's shares fell as much as 7.5 percent, while the benchmark .SETI was down 0.5 percent.
Additional reporting by Saeed Azhar, Viparat Jantraprapweth and Narayanan Somasundrama Yantoultra Ngui and Taiga Uranaka; Reporting by Elzio Barreto and Denny Thomas; Editing by Ryan Woo