Japan's Sumitomo Corporation and Nissin Sugar Co will spend a combined 2.6 billion baht to buy shares in Kaset Thai International Sugar Corp to establish a presence in a strategic location of the sugar industry in Southeast Asia.
Under an agreement signed on Monday, Sumitomo and Nissin will invest in a company established by the family of Kaset Thai's founder.
After Kaset Thai is listed on the Stock Exchange of Thailand, this joint-venture company plans to hold a 25% share, with Sumitomo and Nissin Sugar holding 25% and 5%, respectively.
The total investment of the Japanese firms is expected to be about 2.6 billion baht, Kaset Thai said in a statement yesterday.
With 10-11 million tonnes of sugar-cane production, Kaset Thai is Thailand's third-largest sugar producer, accounting for about 10% of total output. It has factories in Nakhon Sawan and Uttaradit.
Its sugar production was roughly 1.1 million tonnes last year with a sales value of 24.6 billion baht.
Kaset Thai also manufactures ethanol and pulp, which are by-products from sugar cane, and is planning to launch a biomass electricity generation project.
Thailand is the second-largest sugar-exporting country after Brazil and has the geographical advantage of being at the centre of growing Asean economies.
Sumitomo and Nissin Sugar have positioned Thailand as a strategically important area for their sugar business.
Although the companies have focused mainly on trading, they will also be committed to enhancing Kaset Thai's management quality by leveraging Sumitomo's expertise in overseas business management and global trade.
Nissin Sugar has know-how in sugar refining and production accumulated in Japan and will work with Sumitomo to expand business in Asean.