Central Pattana Plc (CPN), the SET-listed property and retail developer under Central Group, has set up a joint venture with Tesco, the British retail giant, to co-develop property in the Thai market.
CPN on Tuesday told the Stock Exchange of Thailand (SET) that the company will set up a new joint venture company called Synergistic Property Development Co Ltd to support the business expansion. The new joint venture company has registered capital of 100,000 baht with ordinary share capital of 1,000 shares at a par value of 100 baht each.
CPN holds a 50% stake in the joint venture company while the other 50% belongs to Ek-Chai Distribution System Co, the operator of Tesco Lotus hypermarkets in Thailand.
Nattakit Tangpoonsinthana, CPN executive vice-president for marketing, said the new company will be set up to expand business in the future. Details of the business model to be developed under the new company are under study, he said.
A source in the market said Tesco had been interested in expanding into the property segment for several years.
The source noted that Tesco Lotus's Rama 4 location is a prospective serviced apartment development for the company.
However, Tesco did not confirm the plan and refused to give any further details on the joint venture.
A source in the retail industry said both retailers want to extend into the property sector to gain more sales and profits because the competition in the retail market is fierce.
CPN branched out into property development many years ago.
Naparat Sriwanvit, CPN chief financial officer, told investors during "Opportunity Day at the SET", the company has aggressively expanded its property business in order to increase revenue and make better use of its assets.
CPN has outlined the development of two condominium projects every year from 2018 to 2020. Each project will be a high-rise condominium with about 400 units.
The company is set to spend 11 billion baht to develop residential projects during 2017-20 despite fierce competition in Bangkok and sluggish housing demand upcountry.
Of the total budget, it will spend 1.7 billion baht to develop new residential projects next year. Budgets of 2.6 billion, 3.2 billion and 3.5 billion have been allocated for 2018, 2019 and 2020, respectively.
CPN shares closed yesterday on the SET at 71.50 baht, down 75 satang, in trade worth 328 million baht.