KPNL

When Narongdej Group cannot handle their own investment, they turn into a sponge by selling-off their assets to Raimon Land Public Company Limited or RML for 500 million baht in cash and 14.31% stake in RML’s shares. The latter is for long-term dividends without putting in any effort. Narongdej Group or KPN Land Limited (KPLN) decided to sell a partial of their assets worth 1,570 million baht with the condition of receiving 500 million baht in cash and 597 million of RML’s shares (฿1.80/share) worth 1,070 million baht, resulting in KPNL holding 14.31% stake in RML. There are two assets that KPNL sold to RML: S19 Project, which is a 1 Rai (1,600 sqm.) property on Sukhumvit 19 Rd., Klong Toei Nuea, Wattana district, Bangkok. The project is worth 2,600 million baht and will turn into a condominium in the future. S28 Project, a 2 Rai (3,200 sqm.) property located on Sukhumvit 28 Rd. The project is worth 5,100 million baht, and will make a huge profit for RML in the future. A commercial date for S19 Project will be in 2022, as it is a new project and the construction has not started. The same case also applies for S28 Project. The answer to the question of why Narongdej Group decided to sell these properties is crystal clear when you look at the combined value of the two projects worth 7,700 million baht. First, funding problem. Narongdej Group will face a funding problem with its limited financial instruments if they decided to go on with the project, because they are not listed in the stock market, while a loan from the bank would be too much. Second, management problem. It’s a bitter truth that Narongdej Group may not be capable of managing and marketing in the real estate business. The simple solution is to find a “helping hand” which is none other than RML, who is considered a solid company with funding and professional management in the real estate business. That is why Narongdej Group decided to receive a return on investment through holding 14.31% of RML’s shares instead of investing in the projects on their own. The profit may be less, but this method will also lower the risk for Narongdej Group. Looks like “Narongdej Group” decided not to stand with their own feet, but on RML’s instead. As for RML, who purchased Narongdej Group’s assets with only 1,570 million baht is considered a small price to pay, while earning a huge opportunity to advance their business further in the real estate sector. Especially, for their vast condominium projects and mixed-used projects in the future.