Southeast Asia Just Minted Its Second Paint Billionaire

15-Feb-2017 Intellasia | Bloomberg | 6:00 AM Print This Post

Surging stocks for coatings companies worldwide have created Southeast Asia’s second paint company billionaire.

Prachak Tangkaravakoon founded closely held TOA Group in 1957 and saw the company’s value surpass $1 billion as the falling cost of raw materials boosted margins, raising the value of paint companies globally. Together with his stake in a Thai sugar factory, Prachak has a net worth of $1.4 billion, according to the Bloomberg Billionaires Index.

A spokeswoman for TOA declined to comment on the billionaire’s net worth or make Prachak available for an interview.

Paint manufacturers that use petrochemicals to produce their coatings have benefited in recent years from the low price of oil. Despite having doubled to $55.68 a barrel from its 12-year low in January 2016, the price of Brent crude remains well below the $100 level it averaged between 2010 and 2014.

“Though the oil price has gone up, it’s still very much in control and that’s a big factor,” said Harit Kapoor, an analyst at IDFC Securities Ltd in Mumbai. At these levels, he said, it makes the “outlook on margins that much lesser of a concern.”

Paint Fortunes

Prachak is the second billionaire to emerge from the paint industry in Southeast Asia. Singapore’s Goh Cheng Liang, the largest shareholder of Nippon Paint Holdings Co., was identified as a billionaire in January 2015 and has a $7.3 billion fortune.

TOA had revenue of 16.5 billion baht ($470 million) in 2015, making it Thailand’s largest paint company, according to Euromonitor. It derives 90 percent of its revenue from its home market, where its paint is used to spruce up the iconic golden spires of Buddhist temples like Wat Thung Setthi and Chedi Phukhao Thong as well as Bangkok’s luxury shopping mall Siam Paragon.

The group was said to have plans for an initial public offering last May in the hopes of capitalising on the boom for the coatings industry, while PT Avia Avian, Indonesia’s second-biggest paint manufacturer, is also thought to be planning an offering this year. Shares of nine global paint companies, including Nippon Paint and Sherwin-Williams Co., have jumped 32 percent over the past year.

“The valuations are quite rich,” said Kapoor. “The premium that people are willing to give for growth is really high, markets are positive, and that’s the reason why this could be an opportune time to look at raising funds.”

Family Legacy

Prachak started the business as a hardware store in 1957 and began the transition to the paint industry in 1964, when he began importing coatings products from Japan. He set up his own production plant eight years later, and became Thailand’s market leader in 1979.

In the aftermath of the Asian financial crisis in 1997, TOA had to downsize its business and negotiate with creditors to restructure its debt. The company closed or sold shares in some of it units to focus on paint and petrochemicals.

Prachak stepped back from running the company’s daily operations during a restructuring in the early 2000s, when he handed over the reins to his three sons and daughter. His eldest son, Vonnarat, serves as chair, while Prachak remains a consultant on strategic affairs.

“He tries not to go to the office,” said Chanin Yensudchai, chair of MM Logistics Co., an oil and gas logistics company founded by Vonnarat, who says he talks with Prachak almost every day. “But you retire, there’s nothing to do, so you think: ‘Why am I throwing away all this knowledge?’ So he still comes in.” billionaire-on-boost-from-surging-paint-values


Category: FinanceAsia

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