The death of the chairman adds uncertainty to King Power as Thai duty-free changes threaten

BANGKOK (Reuters) – The death of Leicester City Soccer Club owner Vichai Srivaddhanaprabha adds challenges facing his King Power International empire as his dominance of Thailand's lucrative duty-free industry comes to the test.

A man lays flowers in front of the King Power headquarters after the company's owner, Vichai Srivaddhanaprabha, and four other people were killed in a helicopter crash in England, Bangkok, Thailand, on October 29, 2018. REUTERS / Soe Zeya Tun

King Power's founder Vichai was killed on Saturday along with four others when his helicopter exploded in front of the King Power stadium in the center of England after a Premier League game.

His death comes just weeks before Thailand plans to auction for its duty-free and commercial concessions threatening to end King's near-monopoly of the sector.

Thailand's Thailand Pcl (AOT), which grants the concessions, might consider granting licenses to multiple operators, analysts said. Unlisted King Power currently controls more than 90 percent of the Thai duty-free market and is the sole operator with concessions at all major airports in the country until 2020.

AOT also plans to expand Bangkok's main airport, which will increase commercial and duty-free space by around 70 percent and increase competition among retailers.

Tourism is booming in Thailand, which received nearly 35 million visitors last year, mostly through the airports where King Power is ubiquitous. However, public debate has intensified through the single duty-free operator structure.

"If there is more competition from others and this new generation of leadership (at King Power) is not as effective as Vichai's generation, then there could be changes (in the way the licenses are granted)," said a senior government official, Reuters , be rejected because of the sensitivity of the topic.

"AOT has not defended this model convincingly enough that it will be difficult for them to find a tender or process that limits competition."

AOT, which said that the current system is important to ensure continuity, declined to comment on the bidding process.

"(King Power) has a successful history in duty-free trading and the travel industry, and now the question arises of how effective King Power can be when it comes to engaging other stakeholders' governments without the leadership of Vichai, especially at the upcoming auction for concessions in Bangkok, Phuket, Pattaya and Samut Prakan, "said Nattabhorn Juengsanguansit, director of Asia Group Advisors, a government advisory firm.

"Winning the upcoming bid is critical to King Power's business and the future of Leicester Football Club."

Retailers such as the Central Group, the Mall Group and the South Korean hotel Shilla are keen to bid, analysts said.

The companies did not want to comment.


While it is not immediately clear who will take over Vichai, analysts and sources say that Aiyawatt, Vichai's youngest son and chief executive officer of King Power, and his widow Aimon will most likely run the family business. Aiyawatt's nickname is Top.

"Top has been his father's apprentice for more than 10 years, so he must have learned a lot from his job," said a politician who maintains close relations with the Srivaddhanaprabha family.

King Power declined to comment on who will follow Vichai as group chairman. Vichai's four children and his wife are part of the company's leadership team.

Vichai, a descendant of Chinese immigrants, founded the King Power Empire in 1989 with a shop in Bangkok selling duty-free goods and souvenirs.

Its business began in 2006 when it received a concession at the new Suvarnabhumi Airport under the then Prime Minister Thaksin Shinawatra's government.

Even after the impeachment of Thaksin this year, Vichai's close relationship with the royal family and a talent for winning people helped King Power bring about political turmoil. Vichai became the country's fifth-richest person with an estimated net worth of nearly $ 5 billion.

For the group expanding into sports, winning the upcoming duty-free licensing auction is critical to generating steady cash flow and funding large investments to attract athletes and executives.

It bought Leicester City in 2010 and also owns the Belgian football club Oud-Heverlee Leuven.

While Vichai was the public face of Leicester City, he entrusted the task of leading the team to Top, his 32-year-old son.

Top admitted that he made some big mistakes in leading the team, but also learned from them.

"If I did not make those mistakes, I would not be here," he said in 2016 on a TEDx talk show in which he mentioned his decision to fire three team managers and buy expensive players who did not perform well.

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Top said the team's failure in the Premier League in the 2012-13 season was "torture", but three years later Leicester City beat odds of 5,000 / 1 to win the Premier League title.

Whether he can crack a similar jackpot with the group's duty-free business remains to be seen.

"I do not know how good Vichai's son is," the senior government official said. "If he's as skilled as his father, there's no problem, but we just do not know."

Reports by Chayut Setboonsarng, Panu Wongcha-um and Patpicha Tanakasempipat; Letter from Miyoung Kim; Editing by Lincoln Feast.

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