Infrastructure funds allowed

Written by changthai11 on Friday, October 3rd, 2008

INVESTING

NUNTAWUN POLKUAMDEE

The Securities and Exchange Commission will allow asset managers to establish new infrastructure funds to invest in existing projects or new ones under construction.

Thirachai Phuvanatnaranubala, the SEC secretary-general, said infrastructure funds could be established starting in mid-2009.

The new class would require amendments to the SEC Act to allow mutual funds to invest in non-completed projects, he said.

Funds could be established to invest in completed projects already generating revenues, or projects under construction that are slated to begin operations in the future.

Mr Thirachai said that public hearings would be held to discuss the funds, which could be structured as a form of asset-backed security based on future revenues generated by a given project.

“Considering the global environment, raising funds from abroad will be more difficult than before. We will need to look domestically to raise funds,” he said.

“Long-term investment funds such as this are needed.

The government is intent on accelerating its 1.7-trillion-baht infrastructure programme, which calls for the construction of new mass transit, energy, water, logistics, health-care and education facilities over the next several years.

An infrastructure fund based on existing projects would have a minimum size of five billion baht, and must have at least 250 unitholders as well as limits on the maximum shareholding for any one investor. Foreign investors will be restricted to holding no more than 49% of total outstanding units.

A fund could be established for projects set up under the public-private joint venture law, or involve assets of state enterprises in the electricity, water, mass transit, transport, telecom and aviation fields.

Pravej Ongartsittigul, a senior assistant secretary-general of the SEC, said that after early discussions with market participants, most asset management companies and brokers supported the concept.

Mr Thirachai said that for projects yet to be completed, investors would face greater risk in the early stages, as revenues have yet to be generated for the fund.

For such cases, the SEC may limit investment to private or institutional investors.