Part 4: International investment and fundraising

Chapter 11 Cross-Border Investment Landscape

This chapter looks at the Thai property market through the eyes of foreign investors. Its strengths are tourism, world-class resort destinations, still-competitive costs, healthcare and infrastructure. Its constraints are the laws on foreign land ownership, the condominium unit quota, foreign business rules, exchange controls and policy risk.

The book separates sources of capital by region: Hong Kong, Singapore, China, the Middle East, Europe and other markets, because each is interested in different assets, conditions and criteria. It then groups investors into four types:

• Family Office: holds for the long term, makes decisions at a moderate pace, and often prefers JV equity or preferred equity
• Private Equity: expects higher returns, has a limited fund life and wants control
• Sovereign Wealth Fund: large, long-term capital, slow decisions, and gives weight to ESG
• HNWI: decides quickly, invests smaller amounts per person, and usually buys property directly or pools money through an SPV

Knowing the investor groups helps the CFO choose the vehicle, documents and return format that suit each one. The trends the book asks readers to watch are wellness and medical tourism, branded residences, ESG, remote workers and senior living. Use them as questions to test each project's market, not as conclusions that apply to every location.

Chapter 12 International investment structures

This chapter compares using holding companies in BVI, Cayman, Singapore, Hong Kong and Labuan, judged on six factors: tax efficiency, legal framework, regulatory stability, reputation, cost and substance requirements. The uses differ, for example large fund structures, a JV with a foreign partner, or a holding company to access the Chinese market.

A DTA reduces double taxation, but to obtain its benefits you need a genuine beneficial owner and tax residence documents. The book discusses treaty shopping as a key risk, because the principal purpose test denies benefits when the main purpose of the structure is to obtain treaty advantages. A company with no staff, office or real decision-making is therefore at risk of being challenged.

Other matters to plan for are the investor's home-country CFC rules, transfer pricing between group companies on an arm's length basis, disclosure of beneficial ownership, and economic substance.

Chapter 13 BOI and benefits for foreign investors

This chapter explains that BOI may change a project's returns, but not every type of real estate is promoted. The sectors the book covers are hotels, medical and wellness businesses, smart city, senior living and other supporting activities. Each type has different conditions on investment amount, size and service format. Residential sales must be analysed separately from the operating business for which promotion is sought.

Privileges divide into tax privileges, such as exemption from or reduction of CIT and import duty on machinery, and non-tax privileges, such as land ownership for promoted activities, visas and work permits. The process must begin before investing, because project design and the timing of the application affect the privileges obtained.

On the financial side, the book recommends building two models, with and without BOI, to see the effect on Project IRR, Equity IRR and NPV, including the cost of complying with the conditions. Privileges may be revoked or clawed back if milestones are missed, the business activity is changed, or ownership is transferred without approval, so BOI and non-BOI activities must be accounted for separately from the start.

Chapter 14 Joint ventures with foreign investors

A good JV must let both sides win together. The book classifies the forms as Equity JV, where parties hold shares in an SPV, Contractual JV, and Development Management Agreement, where the developer earns a management fee without investing. It then sets out a negotiation playbook and term sheet covering capital, governance, returns, exit and dispute resolution.

The most heavily negotiated issue is the value of land when it is contributed as investment; use comparables, RLV and an independent valuer acceptable to both sides. Returns use a waterfall in sequence: return of capital and preferred return, catch-up, then carried interest or promote, possibly with a super promote when performance exceeds target. Calculate both MOIC and IRR for each party, because the share of capital and the share of returns may differ.

The documents must set out capital calls and penalties for default, such as interest, dilution or a forced share buy-out. Reserved matters protect minority shareholders on key issues such as the business plan, borrowing, related-party transactions and winding up.

Exit uses drag-along, tag-along, put/call, ROFR and ROFO. Deadlock is resolved in steps, from a cooling-off period and escalation to senior management, through mediation and shoot-out, to arbitration. The case study of a Thai–Hong Kong JV in a wellness resort project summarises five principles: aligned interests, clear roles, fair economics, workable governance and clear exits.

Chapter 15 Private equity and institutional investors

This chapter helps developers understand how PE funds think. A fund has four phases: fundraising, investing, value creation and exit, so there is a timeframe that shapes exit expectations. The structure splits into the GP, who manages, and the LPs, who provide the money, with a management fee and carried interest above a hurdle. A European waterfall is calculated across the whole fund, while an American waterfall is calculated deal by deal and may include a clawback when the total falls below the threshold.

The negotiation runs from the information memorandum, expression of interest and term sheet through due diligence to the SPA. Due diligence covers legal, financial, market, technical, tax, environmental and operational matters, so developers should have the information ready before opening the data room.

The investor protection terms whose financial effects must be understood are pre-emptive rights, anti-dilution (weighted average or full ratchet) and liquidation preference. Simulate the waterfall before accepting the terms, because these provisions change the founders' share when performance falls short of plan.

Institutional investors also expect quarterly and annual reports containing IRR, MOIC, DPI, TVPI and ESG data (environmental, social and governance). At the same time, developers should in turn check the fund's track record, the depth of its team and its decision-making process.

Chapter 16 Fundraising through overseas capital markets

This chapter is for groups with sufficient size and rating to reach international investors. A dual listing on the Thai market and an overseas market widens the investor base and liquidity, but adds cost, investor relations work and the burden of regulation under two systems.

Offshore bonds offer greater size and longer tenor, but create FX risk when revenue is in THB, so hedging costs must always be included in the comparison. Offerings often use Regulation S for non-US investors and Rule 144A for qualified institutional buyers in the US. Although these do not require registration of the offering with the US SEC, the market expects a high standard of disclosure and due diligence.

Green instruments fall into two types. A Green Bond restricts the use of proceeds to green projects and requires an independent reviewer. A Sustainability-Linked Bond places no restriction on the use of proceeds, but its coupon is tied to KPI targets. Perpetual Bonds and Hybrid Capital help the capital structure from a credit rating perspective, but they cost more and carry call conditions. A Convertible Bond lowers the interest cost, but at the price of future dilution.

The decision should start with the all-in cost after hedging, fees and rating costs, compared with domestic borrowing. If domestic borrowing is sufficient at an acceptable price, an overseas issue may not be worth the added complexity.

Chapter 17 International fund transfers and FX management

This chapter is a practical guide to money flowing into and out of Thailand. The Foreign Exchange Transaction (FET) document is the key evidence of inward remittance, whether for a foreign buyer's purchase of a condominium unit, a capital increase or a shareholder loan. Incomplete documents can cause problems at ownership transfer or when sending money back, so the purpose must be stated clearly from the day the money arrives.

There are two main ways to bring in capital. Equity carries no interest and has no repayment date, but it can be sent back only as dividends after corporate income tax (CIT). A shareholder loan makes the interest deductible, but it must be priced at an arm's length rate, is subject to withholding tax (WHT), and may be caught by debt-to-equity ratio conditions in bank agreements or BOI conditions. A convertible loan is the middle option.

Remittances abroad in the form of dividends, interest, royalties and management fees are subject to different withholding tax rates, which may be reduced under a double tax agreement (DTA) when a Tax Residency Certificate is available. Management fees and royalties must be backed by genuine services and transfer pricing documentation.

On currency risk, the main tools are forwards, FX swaps and options, or a natural hedge that matches the currency of revenue with that of debt. Not every item needs to be hedged; focus on those that affect the project. Payment in digital assets and tokenisation remain under specific regulation, covering Bank of Thailand (BOT) rules, tax rates and treaty conditions, so check the current version before entering into a transaction.