Future Fund edges closer with filing

Economy August 31, 2018 01:00

By The Nation

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THE long-delayed Thailand Future Fund (TFF) has taken a step closer to launch with a regulatory filing for an initial public offering (IPO) of units in the infrastructure fund.



The officials behind the fund on Wednesday submitted an application for the IPO to the Securities and Exchange Commission (SEC) after the originally envisaged fund-raising timeline had been pushed back.

The proceeds of the flotation will be used to finance the construction of expressways.

Prapas Kong-Ied, director of the State Enterprise Policy Office (Sepo), said that the TFF forms part of the government's alternative financing sources for the country's infrastructure development through public offerings, which will help speed up funding and lessen the government's fiscal burden.

Chanvit Nakburee, Sepo deputy director-general and spokesman, said that about 45 per cent of future revenue will come from the Chalong Rat Expressway (Ram Intra-At Narong) and the 55-kilometre Burapha Withi Expressway (Bang Na-Chon Buri) for 30 years, owned by the Expressway Authority of Thailand (Exat). These projects would be backed by the fund's units.

The long-promised fund was scheduled to make an initial public offering in March last year under an earlier schedule. The government aims to tap private-sector financing and use it to bolster economic growth. The Cabinet in May last year approved a plan to use the two expressways as underlying assets for the TFF.

Previously, Prapas said that the Ministry of Finance aimed to raise Bt45 billion through the fund’s IPO from the general public and, after that, the remaining fund units would be placed to institutional investors including insurance firms, the Social Security Fund and the Government Pension Fund.

Sudthisak Wattanavinid, deputy governor and acting governor of Exat, said that the proceeds of the IPO will be used to finance the two expressways linking Bangkok to the west and the east.

Prapas said that the Future Fund was likely to launch its IPO to the general public soon after it gains approval from the SEC.

The units will be offered to general investors through a small lot first, according to the SEC’s requirements.

In other infrastructure developments, Khon Kaen province is awaiting a key meeting of the Commission for the Management of Road Traffic, which will be chaired by Deputy Prime Minister Somkid Jatusripitak in September.

The meeting will consider the first phase of Khon Kaen's smart city project, for construction of a 22.6-kilometre light-rail line from Samran to Tha Phra at a cost of about Bt30 billion, according to a director of Khon Kaen municipality.

If the commission decides to authorise the local municipality to own the project, the next step will be for Khon Kaen Transit System Co Ltd (KKTS) to hire a financial adviser for fund-raising on the stock exchange on expectation to mobilise funds through an infrastructure fund this year.

KKTS is a joint venture, approved by the Ministry of Interior, that would see five municipalities in Khon Kaen province operate the transport project in the province’s Mueang Khon Kaen district. The municipalities are Khon Kaen City, Sila, Mueang Kao Subdistrict, Samran Subdistrict and Tha Phra Subdistrict.

If the commission makes a clear decision to allow Khon Kaen to be the project owner, the commission will adjust the mass transport system plan in provinces such as Nakhon Ratchasima, Khon Kaen, Chiang Mai, Pitsanulok and Phuket, the Khon Kaen municipality official said.

 “We (Khon Kaen) are cleared to invest by ourselves. As planned, we will raise funds this year and start construction late in the year. The project is expected to be completed by2022," he said.

One light-rail route from the north to the south of Khon Kaen is forecast to yield an economic internal return rate (EIRR) of 12.56 per cent, less than for the start of all five routes' EIRR at 21.67 per cent.

Khon Kaen's light-rail transit project will help boost the province’s economic activities and people's income, said Kemchat Somchaiwong, chairman of the Khon Kaen Chamber of Commerce. Khon Kaen's gross provincial product (GPP) is an average of Bt190,000 per person a year.