KBank favours Bt5-bn fund for SPCG
Kasikornbank, the financial adviser to SPCG, said the solar-farm developer had not yet decided if it will cancel plans to launch a Bt5-billion infrastructure fund. KBank says such a fund remained a viable way for SPCG to raise money.
SPCG chief executive officer Wandee Khunchornyakong said earlier that the company might reconsider its plans for the infrastructure fund after finding it could cost more to raise financing via that route than by simply borrowing from a bank.
The company has a high-debt-to-equity ratio at four times from borrowing from banks to finance its solar-farm projects. SPCG was the first company in Thailand to announce the setting up of an infrastructure fund.
Suradech Kietthanakorn, first senior vice president for multi-corporate business at KBank, said it had talked with SPCG on finding high-value financial instruments, and the infrastructure fund remained a reasonable solution. "SPCG is reviewing the plan but it has not dissolved its plan for an infrastructure fund yet. The company might take some time to understand its value," he said.
KBank is among the providers of loans to SPCG, but in the bank’s view, an infrastructure fund is the better solution because the issuer will receive the full amount of the fund at one time and the amount is sufficient for to cover the needed financing. This is unlike bank loans, where the borrower will not receive the full amount at one time, he explained.
Fund mobilisation through a private placement is not the solution for SPCG because the company would face a share dilution, he added.
DBS Vickers Securities (Thailand) previously noted in its research that SPCG was under pressure to paying a dividend in its fiscal year 2013 to shareholders because it had to complete its debt restructuring.
The uncertainty over fund mobilisation might have an impact on SPCG’s profitability in 2014, the research house noted.
KBank expects more infrastructure funds to be launched in 2014 rather than this year. "Many companies in the energy sector have maintained their plans to launch infrastructure funds because financing costs next year will rise from the expected tapering of [the US] quantitative easing," Suradech said.
If the United States tapers off its bond-buying programme, it will have an impact on liquidity, as it will pose a challenge for fund mobilisation via capital markets as well. Therefore, preparing for this eventuality, both for the bank and its customers looking to raise funds in an uncertain market, is KBank’s strategy.
"We told customers that they had to prepare themselves if they wanted to mobilise fund via the debt and capital markets. They should make preparations for two months before making the decision to issue funds or debentures. When the market sentiment is positive, the customer can quickly introduce its fund or debenture to investors," he added.
