MFC last month submitted a letter to the central bank, asking for exemption as the fund is a long-term fund.

"The BOT endorsed foreign investors to invest in the fund. However, whenever we have to raise funds from the foreign party, we'll have to ask for approval from the BOT and each time the amount of funds raised must not be over US$25 million (Bt883 million)," Pichit said.

"The BOT understands that this fund has nothing to do with baht speculation," he said and added, "On the contrary, it's a long-term fund that will strengthen the Thai capital market overall."

The Bt10-billion Thailand Equity Fund 1, co-managed with international private equity investment manager Lombard, was structured to raise 60 per cent from abroad to match 40 per cent raised domestically. Bt1 billion, the last lot of funds expected to flow in January, faced a hiccup after the central bank announced its capital-control measure in December.

The fund, registered in 2002, is a 10-year-maturity fund.

The Thai Bankers' Association, the Finance Ministry and the Government Pension Fund are the local parties participating in the 40 per cent proportion. The remainder will be raised from the California Public Employees Retirement System, the International Finance Corporation, the Asian Development Bank (ADB) and Lombard.

Pichit said that MFC has immediately informed the foreign partners of the exemption and will raise funds to invest in potential private companies that are in line with a plan to list on the Stock Exchange of Thailand.

He said the MFC has not fixed a timeframe to set up the Thailand Equity Fund 2. The fund will invest in companies in Thailand and other Asian countries, especially Vietnam.

MFC will also launch a Bt4-billion energy fund that will invest in 20 non-listed energy companies. The firm's third private equity fund will allocate money to selected companies involved in energy production - biodiesel, biofuel, biomass, wind and solar energy - as well as energy-related products like innovative energy-storage batteries.

The selected companies will be both energy producers and energy-equipment manufacturers. However, the proportion will be weighed by business sector, business cycle and growth potential.

The firm expects the first five years will be a period of business development, with the last five generating profits for both companies and investors.

"So far, the World Bank and the ADB have expressed interest to invest in this fund. The fund has also attracted the attention of foreign energy funds.

"So far we have the applications of around 20 companies. We'll screen them down to only four or five companies as the first group to inject the money," said Pichit.

Piyarat Setthasiriphaiboon

The Nation