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Thailand Future Fund IPO set for October

Preference to sell to retail investors

The long-awaited Thailand Future Fund (TFF) looks set to be allocated to the public in the second week of October, with at least 60% of its units being offered to retail investors, says the head of the State Enterprise Policy Office (Sepo).

Finance Minister Apisak Tantivorawong suggested the infrastructure fund would raise 45 billion baht from the impending initial public offering (IPO) and retail investors will be allotted units before institutional investors, said Prapas Kong-Ied, Sepo director-general.

"The finance minister prefers selling the units to local investors because of strong demand, but it's necessary to conduct overseas road shows. Road shows are scheduled in only two countries, then major provinces such as Phuket, Khon Kaen and Ubon Ratchathani," said Mr Prapas after the Public-Private Partnership (PPP) Committee meeting chaired by Deputy Prime Minister Somkid Jatusripitak.

Sepo is scheduled to go to Singapore and Hong Kong for TFF road shows during Sept 16-20.

For TFF's investment return, it depends on book building, expected to be completed later this month, he said.

Although the cabinet approved a proposal to use two expressways as underlying assets for the TFF in May 2017, the IPO process was delayed from late last year after a glitch in the amendment of the Expressway Authority of Thailand (Exat) revenue contract to transfer money to the government's infrastructure fund.

After the issued was cleared up, the fund faced another obstacle when Exat's labour union filed a petition to stop the fundraising plan, contending that borrowing to refinance road construction carries cheaper costs. The Administrative Court turned down the labour union's request.

According to the cabinet's resolution, 45% of future revenue from the Chalong Rat Expressway and Burapha Withi Expressway, both owned by Exat, will be used to back TFF units.

The TFF IPO will be used to finance construction of the expressway linking Rama III Road-Dao Khanong and the Western Outer Ring Road, worth 30.4 billion baht, and the third stage of the long-delayed northern expressway linking the Kasetsart intersection and Nawamin Road, also known as the N2 section, worth 14.4 billion baht.

Mr Somkid recently said TFF's annual investment return is projected at 3-4%.

In the meantime, Mr Prapas said the committee agreed to include the Nakhon Pathom to Cha-am, Phetchaburi motorway project, worth 79 billion baht, under the fast-track PPP scheme.

The motorway will be developed under the PPP Net Cost scheme, whereby the private sector takes responsibility for revenue collection and allocates it to the government, he said. The government will invest in land and pay for civil works, with a maximum budget of 55.8 billion baht, while the concessionaire pays for civil works, system and rest area construction costs, a project adviser, as well as operation and maintenance and rest area management for 30 years, said Mr Prapas.

The PPP Committee also urged the Transport Ministry and other state agencies overseeing projects to process fast-track PPP projects within their time frames, he said.

The Orange Line's eastern and western sections; the Bang Khun Non-Thailand Cultural Centre-Min Buri section; and the Purple Line between Kanchanaphisek Outer Ring Road and Tao Poon are expected to go before the PPP Committee later this year.

"There are fast-track PPP projects worth 100 billion baht being developed this fiscal year. We need to extend the PPP scheme to other projects in addition to infrastructure projects so others can use the fast-track mechanism," said Mr Prapas.

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