Against All Odds, Keeree Kanjanapas Built Bangkok’s Mass Transit Systems

Construction News
Founding father Keeree, with son Kavin, the CEO.
Founding father Keeree, with son Kavin, the CEO.

Against All Odds, Keeree Kanjanapas Built Bangkok’s Mass Transit Systems

Subways can be transformational, not only for cities, but also for those who build them. That’s been the case in Bangkok, where the elevated Skytrain has helped transform the Thai capital from a city of gridlock to a modern metropolis of gleaming high-rises. “I do believe mass transportation has changed Bangkok,” says Keeree Kanjanapas, founder and chairman of the BTS Group, which built, against great odds, Bangkok’s first subway. He refers not only to traffic flow, but also to the way locals live. “When we started building the BTS Skytrain, people never really considered high-rise condominiums. Now they not only accept them, they want this lifestyle, like in modern cities everywhere.”

Proof can be found everywhere the Skytrain glides overhead. Forests of high-rises sprout alongside, as developers pay hefty premiums for land near stations. “The premium for proximity to mass transit can be as high as 20% for projects within 200 meters of a station,” says Simon Landy, executive chairman of the Bangkok office of Colliers International, a property research and consulting firm. BTS is perfectly poised to capitalize as Bangkok massively expands its mass-transit system. In partnership with leading local developer Sansiri, BTS Group has five major residential real estate projects under way, all selling fast and all close to existing or upcoming mass-transit stations.

BTS reported a record 61.7 million rides in its second-quarter results released last month, with fares totaling more than $50 million, up 7% from the previous year. Although lagging behind other Asian cities in mass transit–the Skytrain launched only at the end of 1999–Bangkok is catching up fast. Both BTS lines and the underground MRT (Metropolitan Rapid Transit) are rapidly expanding, and a handful of lengthy new lines will increase the overall network fivefold.

BTS is in the thick of the bidding to build these new lines, says Kavin Kanjanapas, 41, Keeree’s son, who took over in April of last year as chief executive of BTS. In November BTS joined powerhouse Thai firms Sino-Thai Engineering & Construction Public Co. and Ratchaburi Electricity Generating Holding Public Co. to bid for nearly 70 kilometers of track on the new pink and yellow MRT lines. These are big projects, each likely to cost more than $1.3 billion. Yet they constitute a fraction of the cobweb of lines on Bangkok’s blackboard. BTS plans to bid on 138 kilometers of track to be built in the next five years, says Kavin.

Win or lose, BTS is clearly in the driver’s seat, thanks to the foresight of Keeree, 66, who remains as chairman. Few private companies anywhere can claim experience running mass-transit lines, but BTS also claims unrivaled expertise in operation, management and procurement, thanks to an unusual 30-year concession awarded the company in 1999.

Back then building a subway seemed an unfathomable gamble. Indeed, others failed and Keeree nearly went bankrupt. But after making, then losing, his fortune, Keeree is now worth $1.45 billion, estimates FORBES ASIA. He’s poised for bumper profits as a front-runner in the expansion of the mass-transit system he kicked off two decades ago.

Unexpectedly, the biggest rewards might not come just from condo sales, but also from lucrative businesses tied to the rails–advertising and online sales. This is the newest transition for a family that began by selling watches, eyeglasses and sportswear decades ago but under Kavin’s stewardship is now cashing in on connecting commuting consumers. “We’re really not like father and son,” says Keeree, telling a story of generations of investment, success and struggle. “We’re more like brothers.”

On the mantle is a photo of the two, framing a freshly caught monster fish. They look like two pals on a holiday; both describe regular scuba and fishing trips together. But things weren’t always so jolly. Thailand’s economy was riding high two decades ago, until the Asian financial crisis in 1997. Economies across the region plummeted, but few hit the lows or felt long-term pain as severely as Thailand, where the crisis began.

Even now Keeree struggles to explain the magnitude of his losses. Widely printed estimates have ranged upward of $1 billion, as debt soared with the tanking baht. “Oh, it’s more than that. Much more. I can’t really put an exact figure on it, but it was probably more like $4.5 billion,” he says, visibly pained by the memory.

Keeree is the third son of Mongkol Kanjanapas, whose father immigrated to Thailand from southern China and began as a lowly merchant in Bangkok’s Chinatown. Mongkol moved to Hong Kong to find his fortune and ended up founding Stelux Holdings, selling Seiko watches. Eventually the business morphed into the ubiquitous City Chain, which has more than 400 watch stores in Hong Kong, China, Macau and Thailand. From watches Stelux moved into the eyeglass market, repeating its success with Optical 88 in Hong Kong and across Asia.

Keeree was 13 when he arrived in Hong Kong, and he stayed for 30 years, making his own mark by founding the Seiko Sports Association and sponsoring a legendary soccer team that won seven consecutive league titles. Described by longtime associates as a relentless workaholic, Keeree parlayed his sports connections into a massive sportswear business via his Hwa Kay Thai Holdings, which became the exclusive distributor of Puma sportswear products in Hong Kong and China and eventually all of Asia outside Japan.

While many in the Kanjanapas clan stayed in Hong Kong, Keeree and his older brother Anant looked to Thailand, where land was markedly cheaper than in Hong Kong. The pair built up massive land banks. Keeree formed Tanayong, Anant Bangkok Land, becoming intense competitors as two of Thailand’s largest developers.

Anant’s Bangkok Land specialized in large suburban estates, notably Muang Thong Thani (Golden City), established in 1989 and planned as a self-contained satellite city for 150,000 residents, one of the world’s biggest residential projects at the time. Some liken the project to the massive building estates that skyrocketed in Hong Kong’s housing boom, entire cities of towers in the New Territories.

In Hong Kong, Keeree’s businesses had been varied, including restaurants and hotels. In Thailand he built Thana City Golf & Sports Club. “My whole family, we had so many things: watches, glasses, listed company here, listed companies in Hong Kong,” says Kavin. “We weren’t very focused.”

Keeree unexpectedly found his focus–and his future–in a scheme with Hong Kong parallels. With local traffic grinding to a halt in the 1990s, Bangkok commissioned overhead toll roads, and subway systems like Hong Kong’s highly successful MTR (Mass Transit Railway). Three systems were put out to bid, and Tanayong won one concession. The others went to Bangkok Land and Hong Kong tycoon Gordon Wu’s Hopewell Holdings, although both bowed out long before Keeree launched his Skytrain.

First he had to survive the financial crisis. Keeree was overleveraged and faced devastating debt but decided to double down on his risky subway venture. “We were so far along, I just knew, once we finished, there would be income,” he says. “But if we didn’t finish, there would be nothing.”

Forced to fend off banks and creditors while liquidating assets, he found a young ally: Kavin. Fresh from studies in the U.K., he returned to Asia in the midst of this financial tsunami. He was 23.

In the fire sale that ensued, his business education came fast. He stayed in Hong Kong, helping to dispose of assets, including the lucrative Puma franchise. “We knew our biggest assets weren’t a sportswear company,” he explains. “We knew we had to put all we had at hand, all of our strengths, to finish the BTS. So my father made the decision to bring his whole wealth, everything back here [in Bangkok], to finish the BTS.” He recalls how bankruptcy always loomed over them. “But my father, he’s a fighter. He never gave up. He just kept going.”

Indeed, the Skytrain launched in late 1999. By then the government had stepped in to finish the first line of the MRT, which finally opened in 2004. Meanwhile, hundreds of concrete ghost pillars stretched across Bangkok for years as reminders of Wu’s ill-fated third subway project.

Keeree’s trains were rolling, but he was left with a decimated business empire and unlikely prospects for a rapid resuscitation. With a small initial footprint, and lacking a connection to other lines, ridership remained low for years–around 200,000 a day, enough to cover costs but leaving nothing for expansion. But ridership has since almost quadrupled, and in a remarkable rebound BTS Group spun off its BTS Growth Infrastructure Fund, offering little more than a percentage of future fares as an enticement. It was Asia’s biggest listing in 2013 and the largest private sector IPO in Thai history, generating more than $2 billion.

These days prospects seem blazingly bright. BTS’ 30-year concession runs until 2029, but the original 23.5 kilometers contribute a small slice of the burgeoning profits. Skytrain boasts twice as much track now, contributing 37% of group revenue, according to last month’s quarterly report. But 41% of revenue comes from media, including advertising and online. “That surprises a lot of people,” concedes Daniel Ross, chief investment officer at BTS. “But it’s been that way since 2013.”

This is especially pleasing to Kavin, since media is handled by a BTS unit, VGI, which has been his pet project. “It was my first job,” he says of VGI, which was formed in Hong Kong by some of his father’s friends and later moved to Thailand. “From that day till today that was my focus,” he says. “It’s still my focus, and passion. But now all of BTS Group is my focus as CEO.”

Media is one of four pillars of the BTS business, alongside the Skytrain, property and assorted services. Besides advertising in Skytrain stations, and on the inside and outside of trains, the media division includes large advertising screens in office building s and other locations around Bangkok, and the Rabbit smartcard. Modeled on Hong Kong’s Octopus card, Rabbit not only covers subway payments but is also a ticket to online services. Among its partnerships is a growing relationship with Line, the messaging service that started in South Korea and is dominant in Japan and Thailand.

Anyone riding a subway train anywhere can see the potential of all those smartphones linked to smartcard accounts and messaging. Kavin describes some early experiments, like discounts at fast-food stores pinging passengers departing at stations. Rabbit can monitor not only the results of a coupon offer, but also future spending. And options will only grow as BTS adds more track and connected customers.

Already the profit picture reflects that looming potential. Media contributed 48% of BTS profits, compared with 42% for mass transit, 6% for property and 5% for other services. Those numbers will change, as expenditure on property will turn to income when the proceeds from selling units flow in. Yet media profit spiked 33% over the previous year and should continue to grow at sizzling rates, says Kavin. (Net profits for the year ended March 31 were $118.5 million on revenue of $150.6 million.)

Plus, it’s like fruit falling from the trees. BTS now has 3,752 employees, 57% in the subway division. Media has only 236 workers. “I just leave that to Kavin,” says Keeree, when pressed for insights on the online transformation of BTS. “Or I ask the children or grandchildren,” he chuckles.

Media is also taking BTS to new horizons abroad. While the mass-transit division has investigated opportunities in China, as well as high-speed railway lines proposed for Thailand, media already has a JV with Titanium Compass to oversee advertising at 31 stations of Malaysia’s Mass Rapid Transit Corp., set to start service by the end of the month.

But the real growth is here in Bangkok, and Keeree is happy to let his son serve as steward for this next phase. Critics note that Bangkok still is one of the world’s worst cities for traffic, thanks to the rapid increase in automobiles on the road and the long delays in expanding the system. Keeree believes the era of waffling is over, and the government is committed to mass transport. “Thailand sees the benefit of investing in infrastructure,” he says. “Without it you cannot grow quickly. And Bangkok is really growing now.”