Bt10-bn CP Land issue swells investment capital; Bt100-bn infrastructure funds on the cards
Krungthai Asset Management (KTAM) will manage a property fund worth Bt30 billion in the remainder of this year after being a fund manager to a Bt10-billion property fund of CP Land, which will be offered to investors next month.
Chavinda Hanratanakool, KTAM senior executive and vice president for property fund and private fund management, said yesterday that a Bt30-billion property fund would invest in freehold interests in 10 leading hotels in the country. The fund is pending approval by the Securities and Exchange Commission.
She said property funds would continue to be issued in the remaining months of this year before being upgraded to real estate investment trusts (REITs). Moreover, infrastructure funds, which fund managers estimate to be worth around Bt100 billion, will be issued in the same period.
The outlook for the Stock Exchange of Thailand in the current fourth quarter is bright, so many corporates plan to raise funds from initial public offerings (IPOs) as well as property funds. The SET may not be very volatile because the market has already acknowledged the impact from the current US government shutdown and the approaching deadline for raising the US debt ceiling, she said.
KTAM expects the Bt10-billion CP Land Growth Leasehold Property Fund (CPTGF) to give returns in the range of 6-8 per cent per annum in line with previous property funds, but the actual return will be finalised after the fund is approve by the SEC, Chavinda said.
Somkiat Ruentongdee, executive vice president of CP Land, said CPTGF would invest in 30-year leasehold interests in three locations in Bangkok’s central business district: CP Tower I (Silom), CP Tower II (Fortune Town) and CP Tower III (Phayathai). The unit price has not been finalised yet but will not be above Bt11 per unit.
The company will raise funds from CPTGF to support three-year investment projects including office buildings and residential projects upcountry to cash in on urbanisation and the Asean Economic Community.
“We plan to increase [the proportion of our] revenue from selling residential projects to 50 per cent in the next three years from 25 per cent currently. Revenue from rental will be [reduced to] 50 per cent from 75 per cent,” he said.
CP Land this year targets revenue of Bt2.3 billion, or 25-per-cent growth. Chavinda added that the company had set a target of annual revenue growth of no less than 15 per cent in the next three years.
Sitthichai Mahaguna, executive vice president of CIMB Thai Bank, a financial adviser to CPTGF and an underwriter, said CP Land would invest in one-third of the fund, and about 25 per cent would be offered to retail investors and the remainder sold to institutional investors.
The bank has three or four deals in its pipeline worth a total of Bt10 billion. These consist of one IPO and two or three property funds. Sitthichai said the bank was accelerating closure of the deals to achieve its target of 50-per-cent fee-income growth this year.
CIMB Thai is pursuing investment-banking business for next year but is still focusing on IPOs and mergers and acquisitions, and will be active in mandating REITs and infrastructure funds, he said.
Werapong Suppasedsak, executive vice president of Krungthai Bank, a financial adviser and underwriter to CPTGF, added that KTB and KTAM had actively focused on mandating investment-banking deals to drive fee income, following the corporate value-added strategy. Therefore, KTB might not be seen granting loans to major deals as it did in the past.