SCB upbeat on infrastructure funds

Siam Commercial Bank, a major player in investment banking, expects the demand for infrastructure funds by state enterprises to rise if the public sector’s first proposed instrument of this kind, held by the Electricity Generating Authority of Thailand, gets good response.

SCB yesterday was appointed as Egat’s financial adviser to study the feasibility of setting up an infrastructure fund with initial size of no more than Bt10 billion. The study will take four months before being proposed to the Cabinet for consideration.

Egat is the first state enterprise to be granted permission by the Finance Ministry to raise money through an infrastructure fund to help cut the country’s public debt.

Arthid Nanthawithaya, senior executive vice president of SCB, said Egat was the pilot project for state enterprises that want to raise money from the capital market apart from bank loans. 

The establishment of the Egat infrastructure fund, which is expected to start selling units next year, will encourage other state enterprises to follow suit, and SCB believes this trend will be as popular as the property funds of the past, Arthid said.

Egat governor Soonchai Kumnoonsate said the agency would require investment of Bt400 billion to support its five-year investment programme of installing transmission lines and developing power plants.

Egat earlier issued debentures with a coupon rate of 4.725 per cent, but the proposed infrastructure fund would be another option to help the agency diversify its borrowing costs, he said.

In the first stage, Egat’s 700-800-megawatt North Bangkok Power Plant (NBK) would be sold to the infrastructure fund. Egat is constructing a second unit of the NBK with capacity of 800MW. The second unit will be completed in 2016, after which Egat will consider adding it as an asset to be sold to the infrastructure fund.

SCB is managing a planned Bt100-billion infrastructure fund for True Corp, currently under consideration by the Securities and Exchange Commission.

SCB hopes to underwrite the True Corp fund before the end of this year. If this is achieved, it will become the third infrastructure fund in Thailand after the BTS Growth Infrastructure Fund and Amata B Grimm’s fund. 

Including the True Corp infrastructure fund, SCB this year will manage deals worth more than Bt300 billion, which will help boost fee income from its wholesale banking. Fee-based income from investment banking this year is projected to expand by more than 20 per cent against the single-digit growth of interest income. Total revenue from wholesale banking this year is also expected to grow by 20 per cent.