BTSC fund will allow group to focus on growth

The fund targets generating yields of 6-7 per cent a year for investors. Income will come from Skytrain operations, which produce earnings before interest, tax, depreciation and amortisation of more than Bt4 billion annually.
BTS Group Holdings (BTSC) has appointed Phatra Securities as its financial adviser for issuing the fund.
Keeree said the company’s strategy was to focus on infrastructure business, which already generates 65 per cent of the group’s income. The company will slow down its expansion in property business, while the group’s other two business arms, media and services, will grow in line with business trends.
“We have decided to focus on infrastructure because we have experience of more than 13 years in that area ... after getting the original 30-year concession in 1999 to build 23.5 kilometres of the BTS Skytrain. We also have experienced staff and believe we can do this type business both domestically and overseas.
“But before we expand the business, we must have the capital to support our strategy. Raising capital by issuing the infrastructure fund is one way to show we are ready to do business. This will facilitate achievement of the business plan and any joint bidding to operate projects,” said the company chief.
On the domestic front, the government policy is to invest in at least 10 additional rail routes, extending overall coverage to about 500km across Greater Bangkok by 2029.
The company is interested in investing in the 12km Green Line extension from Mo Chit to Saphan Mai, the 13km Green Line extension from Bearing to Samut Prakan, the 36km Pink Line from Khae Rai to Min Buri, and the 18km Light Rail Transit Line from Bang Na to Suvarnabhumi Airport.
“We are interested in joint bidding to build all four lines when the government opens the projects for bidding,” he said. “Should we be selected by the government for these projects, having financial strength will help us in the investment process, which could facilitate a more rapid development of these extensions and new lines under the current mass-transit master plan.”
However, if not successful, BTSC is also interested in investing overseas, especially in the upcoming Asean Economic Community and elsewhere in Asia, if opportunities open up for the company’s expansion.
“When we raise funds through the infrastructure fund, the plan for which will be submitted for shareholders’ approval at a meeting on December 18, we believe we will have enough capital to expand our investment in the future,” he said.
BTSC operates the Skytrain’s existing Green Line under a concession due to expire in 2029. As the company intends to subscribe to one-third of the planned infrastructure fund, whose value is expected to be at least Bt50 billion, it will remain under BTSC control.
Keeree said that while the company would continue to be involved in property business, it would develop this segment of its operations as and when business opportunities arise as opposed to planning a specific number of launches each year. This would enable it to focus on infrastructure business expansion.
“We will not plan to launch a certain number of projects per year, but will invest when we see a business opportunity, or maybe in a joint venture with another property firm rather than investing by ourselves,” he said.
The company has land worth more than Bt10 billion for the development of residential projects close to the mass-transit system. This is sufficient for BTSC’s own project development or joint activity with other property firms, he added.
The group’s media business, operated by VGI Global Media, and service business such as ticket-cards will grow on their own in line with business trends. “Both businesses, media and service, can operate without the need for more investment,” he said.
Currently, 65 per cent of BTSC’s revenue comes from the mass-transit system, 25 per cent from advertising, about 10 per cent from property, and a small amount from services.
In the group’s last fiscal year, which ended in March, it posted revenue of Bt9.25 billion and a net profit of Bt2.1 billion. Revenue of Bt5 billion and net profit of Bt1.09 Billion were achieved in the first half of the current fiscal year.