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 Thailand's most profitable bank more than doubled.
The U.S. conglomerate sold a 7.6 percent stake 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 bank to 25.3 percent, worth about $1.65 billion.
GE's stake is now at a level where potential buyers would not have to put forward a mandatory general offer for Bank of Ayudhya, making it less expensive for lenders looking to expand into Southeast Asia's second-largest economy. Also, foreign banks eyeing the stake would not need approval from the central bank, which caps their ownership at 49 percent.
"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.
Malayan Banking Bhd (MBBM.KL) and Australia & New Zealand Banking Group (ANZ.AX) were among the lenders approached by GE after the U.S. conglomerate hired Morgan Stanley (MS.N) to review its 32.9 percent stake, sources previously told Reuters.
Maybank, which already has a market-leading retail broking platform in Thailand, will benefit from a stake in Bank of Ayudhya if it wants to build up its retail banking platform in the country, said Keith Wee, an analyst at OSK Investment Bank.
ANZ aims to get a banking licence in Thailand in 2014 as it expands in the region, seen as an important bridge between the rapidly growing markets of China and India.
Bank of Ayudhya, ANZ and Maybank declined to comment.
The sale would surpass Thanachart Bank PCL's $1 billion acquisition of a 47.6 percent stake in Siam City Bank SCIB.BK in March 2010.
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 has agreed not to sell any more Bank of Ayudhya shares in the market for the next six months, although it could offload its remaining 25.3 percent stake to a strategic buyer, the bank said in a statement on Wednesday.
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 exchange rate at the time.
The U.S. conglomerate initially acquired a 25 percent stake for 16.00 baht a share and later increased it to nearly 33 percent.
GE sold part of its 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 undercapitalized 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.
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.
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, Narayanan Somasundrama, Yantoultra Ngui and Taiga Uranaka; Editing by Ryan Woo)
This story has been refiled to restore the dropped word, "Australia", in the name in the fifth paragraph