The Bt10-billion Thailand Equity Fund, co-managed with international private equity investment manager Lombard, was supposed to raise 60 per cent from abroad to match 40 per cent raised domestically, but fell almost Bt600 million short after the central bank announced its capital control measures in December.

"The money is gradually flowing into the fund and the last lot, of nearly Bt1 billion, was supposed to arrive last month," president Pichit Akrathit said yesterday. "Following the measure, foreign investors have halted their investment and it's unlikely that we can raise the remaining funds this month, which is the deadline."

MFC Asset Management plans to launch an energy fund and a Thailand Equity Fund 2 this year. However, with the reserve requirement measure in effect, the firm feels uncertain about its ability to attract the investment, even though the funds all have 10-year maturity.

Sixty per cent of the Thailand Equity Fund 2 is to be invested in unlisted Thai companies, while the remaining 40 per cent will be invested in unlisted companies in other Asian countries.

MFC Asset Management plans to discuss its energy fund with the World Bank, to seek investment as well as technical and research support. The Bt4-billion energy fund will invest in 20 unlisted energy companies. It is expected to start raising money this month and will be registered next month.

"We'll have to talk with the central bank [about exemption from its reserve requirement]," Pichit said. "The purpose of this type of fund is not short-term investment, that can cause the kind of speculation that the central bank is worried about.

"These companies need funds to grow and this is another financial alternative for them to develop their businesses. It's a long-term investment."

Launched in 2002, the Thailand Equity Fund invested in 20 unlisted companies with the potential to grow and later, to list on a Thai bourse - either the Stock Exchange of Thailand or the Market for Alternative Investment.

Over the past five years, the fund has seen K-Tech Construction and Trinity Watthana listed on the SET and the MAI, respectively. Mermaid Maritime, a subsidiary of Thoresen Thai Agencies, and entertainment provider and television producer Kantana, are also on its list.

A private equity fund invests in unlisted companies. After launching its Thailand Equity Fund, MFC Asset Management launched a Tsunami Recovery Fund to helping 20 companies affected by the December 2004 catastrophe.

All of its private equity funds are offered to institutional investors only.

Piyarat Setthasiriphaiboon

The Nation