Arthid Nanthawithaya (right), CEO of SCBx and Chairman of the Executive Committee, and Jirayut Srupsrisopa, CEO and founder of Bitkub Capital Group Holdings Co Group. SCBx recently announced an investment in Bitkub by acquiring 51% of Bitkub's total shares from Bitkub Capital Group Holdings, in a deal worth 17.8 billion baht.
SCBx Group's acquisition of Bitkub is likely to cause pain for small cryptocurrency traders as it may significantly increase the exchange's market share, which is currently 90%, thanks to large capital reserves and the bank's customer base.
Analysts expect SCBx to enjoy 1 billion baht in profit from Bitkub over the next year alone.
After the acquisition was announced, SCBx shares closed Wednesday at 131.5 baht, up 1.15% on the Thailand Stock Exchange, while Bitkub's KUB coin rose 84.2% to a all-time high of $ 2.49.
Thai Fintech Association President Choladej Khemaratana said SCBx's acquisition of Bitkub Online will allow the bank to enter the sector immediately and generate more cross-sales from the companies' large customer bases.
The merging of the two client bases will greatly amplify their business values โโand market size, he said.
The Thai digital asset market has seen rapid growth this year, as hopes for big profits have drawn a new generation of investors to the market.
According to Choladej, Thailand now has around 1.6 million digital asset trading accounts.
"Personally, I think Bitkub has sold its shares at the right time as it is now the peak of the crypto market. It is common for startups to make some profit when their businesses are growing," said Choladej.
Sam Tanskul, managing director of Krungsri Finnovate (KFIN), a corporate venture capital arm of the Bank of Ayudhya, said that KFIN invests in Thai cryptocurrency startup Zipmex, which also offers an exchange platform service. Digital assets would expand the bank's new business opportunities.
"The bank also plans to recommend that wealth clients gradually allocate their investment portfolio to digital assets to contribute to better returns in the digital age," said Sam.
Zipmex plans to fundraise in another round of Series D next year, and KFIN also plans to increase its stake in the startup.
Meanwhile, Niran Pravithana, CEO and founder of Ava Alpha Lab, also expressed his opinion on Facebook that SCBx's acquisition of Bitkub is a clear example of how traditional banks can avoid digital disruption and adapt to the world of fintech and blockchain technology.
He said traditional financial institutions are unlikely to be disrupted or disappear from the financial world because they have the ability to spend large amounts of money on tech startups.
The banks that will be affected are those that cannot change or are unwilling to change, and now is the time for all financial institutions to start looking for opportunities to adapt to technological changes, he said.
Securities analysts have a positive outlook on SCBx shares and expect the acquisition to generate around 1 billion baht of profit for SCBx next year and create long-term business synergy for the SCBx Group.
According to Asia Plus Securities (ASPS), Bitkub generated 3.3 billion baht of revenue and 1.5 billion baht of net profit in the first nine months of the year.
The broker said Bitkub will post an estimated annual profit of around 2 billion baht, of which around 1 billion baht will represent profit for SCBx, or 3% of SCBx's profit forecast for 2022.
Strategically, Bitkub's integration with SCBx should enhance the company's system development and strengthen customer bases for both, ASPS analysts said.
The broker recommends buying SCBx shares, giving the base price in 2022 at 140 baht per share from fintech business development, which is expected to support long-term return on equity and is a factor that will drive up the price of shares per book more than 1 time from the current 0.95 times.
Bitkub has also previously disclosed plans to list its shares on SET, which will indirectly enhance the value or capital gains for SCBx in the future.
A commercial bank analyst said she believed SCBx's acquisition of Bitkub reflects SCBx's plan to expand its wealth management business and focus on younger clients, who are paying attention to investments in digital assets rather than to investments in traditional assets.
Therefore, SCB's synergy with Bitkub is a way to expand the commercial and customer segment, the analyst added.
