Rail to the rescue as BTS transforms itself: Kavin Kanjanapas
Against great odds, the BTS Group Holdings built Bangkok’s first Skytrain – transforming a congested capital into a clean and organised metropolis.
When it comes to business acumen in the Kanjanapas family, it would appear the apple doesn’t fall far from the tree. BTS Group Holdings CEO Kavin Kanjanapas is the eldest son of Keeree Kanjanapas, BTS Chairman and the founder and owner of its major subsidiary Bangkok Mass Transit System. Together, the pair have paved the way for a brighter transport future in Thailand. However, the road to the top was not an easy one.
Shortly after graduating from college, Kavin was summoned home to help salvage his father’s company, which had accumulated debts of up to THB100 billion in the wake of the 1997 Asian financial crisis. When BTS launched Thailand’s first Skytrain in 1999, purchasing power took a sharp decline and the company sank even further into strife.
Even faced with the overwhelming debts, Keeree and Kavin stood by the business and rebuilt it from the ground up over 10 exhausting years. While his father dealt with debt rehabilitation and negotiation in Bangkok, Kavin focused on the family’s businesses in Hong Kong. However, most of the Bangkok ventures were eventually abandoned to secure the family’s principal investments in Thailand.
Early days of BTS Group Holdings
Formed in 2010 after merging with Tanayong – a property development firm founded by Keeree in 1968 – BTS raised THB62.5 billion in the biggest private sector IPO in Thailand’s history in 2013. This milestone marked the end of more than a decade of hardship, and Kavin was well-equipped to take over the position of CEO from his father in 2015.
Today, BTS is the thirty-second largest company in Thailand, with a market capitalisation of THB102.7 billion. The company aims to provide a sustainable and leading set of ‘City Solutions’ to urban communities across Asia, supporting the needs of consumers in four principal business sectors: mass transit, media, property, and services.
BTS’s Bangkok Mass Transit System aims to improve the quality of life for the city’s population by easing traffic congestion and providing an environmentally friendly transport alternative for commuters. As the largest mass transit operator in Thailand, BTS has 66% ridership market share and 35 stations stretching 36.3 kilometres.
Of its 4,243 employees, 51% are dedicated to the company’s lucrative mass transit division. Kavin is proud that the BTS transit system is one of few in the world run by a family business instead of by government.
It’s not just about transport
BTS also focuses on the media business through its subsidiary VGI Global Media, with a 42% market share and a daily reach of up to 3.5 million people. A pioneer in targeted, data-driven advertising, VGI is the most profitable out-of-home (OOH) media company in Thailand, with more than 10,000 displays across the OOH media network nationwide.
Alongside its exclusive concession to manage advertising in BTS stations, VGI has expanded into advertising in key offices and residential buildings in Bangkok as well as airports and roadside media across Thailand. Having been entrusted with the running of the media company from the start, Kavin holds high standards for VGI and looks forward to watching it flourish beyond the end of BTS’s 30-year concession in 2029.
This potential is already reflected in BTS’s profits, with 35% of revenue from media, compared with 49% from mass transit, 7% from property and 9% from other services. Looking to expand into other ASEAN countries, VGI has invested in a joint venture, Titanium Compass Sdn Bhd, to advertise in 31 stations and 58 trains in Malaysia’s Mass Rapid Transit system.
Engaged in property development since 1968, BTS is the second-largest hotel company in Thailand. Operating globally, the Group is focused on developing and acquiring residential and commercial properties along existing and future mass transit lines, and strategic partnerships with other property players to strengthen its business.
In a new foray into hotels, BTS, via its 35% associate U City Pel, has acquired the European brand Vienna House for THB12.3 billion, planning to expand its business from Central and Eastern Europe to regions including Thailand, Asia and the Middle East.
BTS has also invested THB20 billion in new plots of land for a joint venture development in condominium and low-rise residential projects with SET-listed developer Sansiri Plc. Located near mass transit lines, Kavin says such plots are quality investments as the capital gain from increasing land prices is higher than the interest offered by banks.
As the final division of its four-pronged business, BTS also acts as an incubator for lifestyle-enriching service businesses. BTS’s Rabbit card is Thailand’s first e-money service that can be used on its transit system as well as in the retail, service and tourism sectors.
At BTS, strategies are based on five foundations:
- Experiences in rail mass transit
- Synergy across all four businesses with rail mass transit at the core
- Financial strength
- Innovation
- Customer satisfaction
The company is now in the process of extending this to become an e-wallet, giving BTS information on people’s activities to feed its advertising operations. Operating a Chinese fine-dining restaurant chain, an electronic payment solutions provider, the Rabbit Rewards loyalty program, and a construction contractor, BTS’s services arm supports the rest of the business and provides a potential source of future revenue growth.
Quickly catching up with its competitors
Although lagging behind other ASEAN cities in mass transit, Bangkok is catching up fast, with both BTS lines and the underground Metropolitan Rapid Transit expanding rapidly. Over the next 15–20 years, the Thai government plans to increase the current 109.6 kilometres of mass transit lines to 515 kilometres.
According to Kavin, the future of BTS’s four core businesses looks promising thanks to Thailand’s ambitious infrastructure and mass transit development plans, changing lifestyles, budding property development, and growing tourism.
As a mass transit-focused business, BTS plans to secure new transit lines and capitalise on the opportunities that filter down to its other businesses in media, property and services. The current BTS Skytrain network runs for 36 kilometres through the heart of Bangkok’s commercial, business and tourism districts.
Kavin says the target for the next five years is to add an extra 178.6 kilometres to the 95.7 kilometres already secured by the contract, a figure that will continue to grow as passenger demand increases and the rail system expands.
The biggest procurement of trains in the country
In Thailand’s largest single order of trains, BTS recently procured 46 four-car trains from Siemens and Changchun Railway Vehicles to accommodate increasing patronage. BTS is eager to become involved in the dual-track project, and plans to secure the upcoming Green line extension and targeted new line – a total of 82.9 kilometres in the next five years.
In property, BTS has formed a strategic alliance with Sansiri – Thailand’s leading property developer – to develop 25 projects close to transit lines over the next five years, worth approximately THB100 billion.
Through its media subsidiary VGI, BTS plans to continue its evolution from a Bangkok-focused entity into a nationally integrated media platform. BTS is clearly in the driver’s seat, thanks to the foresight, leadership and perseverance of Keeree and Kavin Kanjanapas.
Few private companies can claim experience running mass transit lines, yet BTS has demonstrated unrivalled expertise in operation, management and procurement, ultimately transforming Thailand’s mass transit sector into an efficient and fully integrated system.