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'Firms may have to cope with rise in funding cost'

MEDIUM-SIZED businesses may face difficulty in raising funds, as the likely tapering of US quantitative easing next year will force private firms to offer high returns to investors, according to Siam Commercial Bank (SCB).

SCB executive vice president Vorada Thangsurbkul said yesterday that the QE tapering, which is likely in 2014, would put pressure on the cost of funding for private firms, especially smaller-sized companies.

While large companies will have to be more flexible in bearing the cost of funding, medium-sized companies that plan to raise funds must have the capability to bear the high cost, she said.

SCB as a major player in investment banking is advising clients that plan to raise funds through the capital market to tap alternative sources or seek partners instead.

"Corporates have to grow, therefore they have to mobilise funds to strengthen growth, but when yields are going up because of the QE tapering, customers should rethink the option of raising funds through the capital market, whether it will still have value for them," she said.

SCB, however, remains upbeat about the prospects for investment-banking business in 2014, saying many activities, including initial public offerings, infrastructure funds, real estate investment trusts and mergers and acquisitions, are expected to be continually offered.

The fragile economy is prompting strong firms to buy businesses at home and overseas, she said, and noted that the regional market integration under the Asean Economic Community would create connectivity activities and demand for deal activities.

"We estimate the value of deals in 2014 for SCB will be similar to 2013 at more than Bt10 billion," Vorada said.

In addition, she said the bank had extended the subscription period for the IPO of the True Telecommunication Growth Infrastructure Fund (TRUEGIF) from Tuesday to today, as this month has several holidays. The fund, however, is already oversubscribed, with major institutional investors trying to pick up a stake.


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