FIRST INFRASTRUCTURE FUND TO BE LAUNCHED NEXT YEAR

       Thailand's first ever infrastructure fund - to finance construction of the 34-kilometre Srirasmi Expressway from Bang Sue to Taling Chan - will be unveiled around the second or third quarter next year.
       Prapa Puranachote, senior executive vice president and chief provident-fund business officer at Krung Thai Asset Management (KTAM), said the Expressway Authority of Thailand (EXAT) would take responsibility for paying an annual dividend to unit-trust holders of the fund during the construction period, which is expected to last four years. KTAM will manage the Bt20-billion fund.
       However, whether the minimum annual guarantee will be provided to the unit-trust holders has not yet been determined.
       EXAT will manage fresh capital arising from the fund sales. For instance, the company might utilise 10 per cent of the capital to finance construction in the first year and it might allocate the remainder in other investment instruments to pay dividends to the unit-trust holders.
       KTAM has jointly worked out details of the 30-year-maturity fund issuance to finance the Srirasmi Expressway with EXAT over the past three to four years.
       The Securities and Exchange Commission gave the nod last October to asset-management companies setting up infrastructure funds to invest in completed projects generating revenue or projects under construction and scheduled to start operations.
       An infrastructure fund based on existing projects should have a minimum size of Bt5 billion and must have at least 250 unit-trust holders, with limits on the maximum shareholding of any one investor. Foreign investors are restricted to holding 49 per cent of total outstanding units.
       Prapa said the authorities planned to expropriate land from those who live in the construction area next year. The expropriation will be subject to Cabinet approval.
       "The government will support the expropriation budget of Bt9 billion, while the construction budget of Bt20 billion will be raised in one transaction," she said.
       The expected return for the 34-km expressway is based on an assumption of initial traffic of around 80,000 vehicles a day with 2-per-cent growth per year.
       Investors will be able to select whether they want a fixed or floating return. The floating return will be tied to the minimum lending rate.
       Prapa added that the return should be half a percentage point higher than the 30-year government bond, now being offered at 4.8 per cent per annum.
       EXAT can make early redemption but the company would have to specify the price in advance.
       On a separate matter, Prapa said KTAM would this year roll out a Bt1.7-billion property fund to invest in a high-end hotel in Phuket. The hotel's occupancy rate now stands at 65 per cent and the minimum room rate is higher than Bt10,000 per night for a standard room.
       Most of the hotel's customers are foreign tourists.
       "Currently we are negotiating with the hotel owner about the minimum return guarantee that will be offered to investors," Prapa said.
       KTAM will launch another property fund at the beginning of next year. The fund of more than Bt5 billion will invest in a luxury hotel in Chiang Mai.

       The Securities and Exchange Commission gave the nod last October to asset-management companies setiing up infrastructure funds to invest in completed projects generating revenue or projects under construction and scheduled to start operations.