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INFRASTRUCTURE FUND

Capital market 'needs to help state'

SECURITIES COMPANIES and financial advisers are ready to help state enterprises launch infrastructure funds and clear obstacles to fund development, the Federation of Thai Capital Market Organisations (Fetco) said yesterday.

Pattera Dilokrungthirapop, chairperson of the Association of Thai Securities Companies and vice chairperson of Fetco, said each agency and each project required a different pattern of capital investment.

"It's unnecessary for each state agency's infrastructure fund to have the same pattern, due to the different methods of income realisation and different characteristics of enterprises. Financial advisers and securities companies will help give advice," she explained.

Pattera said the funds should also offer trust units to foreign investors, given that local investors might not be sufficient in number to accommodate the unit offering.

However, if the funds are related to national security, the government should step in to invest in the funds by itself. It should examine which investments should be opened up to private participation and which should not, she said.

Both foreign and local investors are keen to invest in the infrastructure funds, thanks to the substantial returns they offer, which are suitable for long-term investors, she said. The funds would also help boost the country's future growth.

Infrastructure funds offer different rates of return depending on the type of business. In other countries, funds with substantial long-term revenues will yield returns of 5 per cent, while some offer returns of between 7 per cent and 8 per cent.

Investors now have higher confidence in Thailand, and they believe the upcoming appointment of a Cabinet will boost confidence even further, she said.

The kinds of infrastructure fund that she wants to see quickly established those covering an integrated transportation system.

Kesara Manchusree, president of the Stock Exchange of Thailand, said investors had gained confidence and were now paying more attention to listed companies' financial performance and state projects than on the political situation for the rest of the year.

The exchange will conduct four roadshows in Hong Kong, Singapore, the United States and Australia over the remainder of the year, while a "Thailand Focus" event will be held on August 27 to allow listed companies to meet foreign investors. The Securities and Exchange Commission's (SEC) regulations for the establishment of infrastructure funds include closed-end funds with registered capital of no less than Bt2 billion, direct investment in infrastructure projects or a stake of more than 75 per cent in a company that invests in or generates income from infrastructure projects, such as rail, expressway, electricity, tap water, airport, sea port, telecommunications, and alternative energy.

Each project's investment value has to be no less than Bt1 billion.

Under the SEC regulations, infrastructure funds can also invest in green-field projects, and dividend payment has to be no less than 90 per cent of net profit.

Meanwhile, the SEC will tomorrow discuss with Airports of Thailand (AOT) the detailed establishment of an infrastructure fund to help lessen the state burden and promote investment.

Vorapol Socatiyanurak, secretary-general of the securities watchdog, said tomorrow's discussion with AOT was the result of NCPO deputy head Air Chief Marshal Prajin Jantong's August 12 invitation to consider the setting up more than just one infrastructure fund for the state's planned programme, as the establishment of several funds would provide for flexibility.

"We've proposed several types of solutions. Infrastructure funds should be established for airports, sea ports, expressways and other developments, while other alternatives for fund mobilisation like securitisation and property funds were also presented," he said.

After the discussion, Prajin requested agencies to discuss the details with the SEC and provide regular reports, he said.

The SEC will set up a specific unit for fund mobilisation through infrastructure funds, Vorapol said. Its formation will be finalised soon.

He said he personally supported the state's mobilisation of capital through infrastructure funds, as investment could be made rapidly and there would not too great a capital burden on the state budget.


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