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Thai banks have managed to maintain good levels of liquidity despite the financial crisis and this has provided a steady stream of available capital for growing businesses despite global lending conditions. After the country's political unrest cooled in the latter half of 2010, banks facilitated acquisition financing and acted as underwriters for the market's few IPOs....

Thai banks have managed to maintain good levels of liquidity despite the financial crisis and this has provided a steady stream of available capital for growing businesses despite global lending conditions. After the country's political unrest cooled in the latter half of 2010, banks facilitated acquisition financing and acted as underwriters for the market's few IPOs.

One particularly interesting development in the past year has been the increasing tendency for Thai banks to finance regional projects. As international banks largely lost their appetite for Southeast Asian project financings, regional banks seem to have stepped in to fill that space, with Thai banks being particularly active. In fact, the year's largest project, the $2.7 billion Hongsa Mine-Mouth power project in Laos PDR, was financed by a syndicate comprised entirely of Thai banks. As one partner who worked on the Hongsa project noted: "This is the biggest project financing of the entire year and it is very exciting that it is entirely led by Thai banks. It really shows how they have liquidity despite the financial crisis, unlike international banks. This is generally a good thing for Thailand."

Regional commercial banks and multilateral institutions (for example, the Asian Development Bank and the International Finance Corporation) also seem to be returning to the projects market and Thai developers have been active both in domestic and regional projects but also in overseas acquisitions in the energy sector.

Government support for renewable projects has also paved the way for green energy projects within Thailand, and Thai banks are again taking the lead in financing. The PPP (public-private partnership) structures rolled out by the government in early 2010 have started to directly influence the market in the form of a proliferation of projects. Property lending also has remained strong, as Thailand's tourist trade and residential, industrial and commercial needs continue to grow.

The strength of the Thai economy is of course bad news for restructuring practices, which generally benefit counter-cyclically from market conditions. However, leading practices do continue to advise business in carrying out their court-mandated restructuring and business plans and ensure that the companies are compliant.

The political unrest in Thailand in the earlier part of 2010 still has a lingering hold on the market, with equity capital markets offerings remaining low and major offerings still being few and far between. However, the market has largely rebounded from that early period of uncertainty, with foreign investors willing to make inbound acquisitions and robust activity on the outbound side and through debt issuances....

The political unrest in Thailand in the earlier part of 2010 still has a lingering hold on the market, with equity capital markets offerings remaining low and major offerings still being few and far between. However, the market has largely rebounded from that early period of uncertainty, with foreign investors willing to make inbound acquisitions and robust activity on the outbound side and through debt issuances.

"It was pretty surprising how quickly M&A activity rebounded," says one partner. "I think investors are perhaps becoming so used to the political situation being unpredictable in Thailand that they're starting to factor it into their investments. They know things are going to happen but they also see that the country always seems to become stable again and the market is still just so good for foreign investment."

In a situation largely similar to what is happening in mainland China, Thai banks remain highly liquid and are looking for places to invest capital. This has in turn led to readily available acquisition financing for Thai companies looking at targets abroad, and is a positive signifier of increased outbound activity. These favourable conditions have been enhanced further by the appreciation of the Baht against the US dollar.

Capital markets work on the other hand remains quite a mixed bag for many practitioners with few equity transactions being seen. Debt work remains the real driver: "Demand for debt capital markets work is really the capital markets story in Thailand," says one partner. "There are IPOs here and there, but those are not where many firms focus their practices."

The level of transactional work seen by firms in the next year will very much depend on how the political situation plays out in the near future, the value of the Baht and the extent to which Thai companies continue to be drawn to outbound M&A transactions. The legal market will continue to be competitive, with local Thai firms becoming increasingly sophisticated and able to handle the types of transactions that were previously the domain of international firms at a fraction of the price. However, with outbound work on the increase, international firms will be able to take the advantage by leveraging off their superior global networks.