* Fund prices at 10.80 baht/unit, high end of range
* BTS chairman says fund sale to be oversubscribed
* IPO set to be Thailand's biggest ever
By Khettiya Jittapong and Elzio Barreto
BANGKOK/HONG KONG, April 4 Bangkok SkyTrain
operator BTS Group Holdings Pcl is set to raise $2.13
billion through an initial public offering of its infrastructure
fund, sources told Reuters, making it Asia's biggest offering so
far this year.
The IPO, which will be a record for Thailand, reflects
strong investor interest in the country. Thailand is on track
for a second straight year of robust economic growth and had the
best-performing equity market in southeast Asia last year.
The sale also highlights a surge in equity fund raising in
southeast Asia. Indonesia's PT Matahari Department Store
raised $1.3 billion in a share sale in March and
Mapletree Greater China Commercial Trust, a Temasek
Holdings-backed real estate investment trust, conducted a $1.3
billion IPO in February.
The BTS Rail Mass Transit Growth Infrastructure Fund is
selling 5.79 billion units at 10.80 baht each - at the top of a
marketing range - putting the total value at 62.5 billion baht
($2.13 billion), the two sources with direct knowledge of the
They declined to be identified because they were not
authorised to speak publicly about the matter.
Earlier, BTS Chairman Keeree Kanjanapas told Reuters the IPO
price was likely to be at the high end of an indicative range of
10.4-10.8 baht per unit.
"The fund is oversubscribed as we get strong demand from
investors," Keeree said.
The IPO was priced to yield 5.8 percent for the fund's
investors. This compared with a yield on the benchmark five-year
Thai government bond of around 3.1 percent.
A unit of Tesco priced its $600 million property fund at 6.5
percent a year ago, and a rally in its shares brought the yield
down to 4.5 percent by February, according to Merrill Lynch.
"For investors who prefer stable return, it will be a good
choice," Yernyong Thepjumnong, Chief of Equity Fund Manager of
Krung Thai Asset Management.
"If you are happy with a yield of about 5 percent or
slightly higher than 5 percent, it will be an interesting
alternative for investment at a time that domestic interest
rates are quite low."
Benchmark interest rates for 12-month deposit accounts are
about 2.25-2.85 percent.
The IPO is the largest in Asia so far this year, followed
by Mapletree's offering. It is also the biggest ever in
Thailand, surpassing $727.6 million raised by Thai Oil Pcl
in 2004, according to Thomson Reuters data going back
SkyTrain is an elevated train system in service since 1999
that covers about 23.5 km (14.5 miles) in greater Bangkok and
carries more than 600,000 passengers per week day.
About half of the IPO proceeds will be used to bid for four
new mass transit lines, BTS Group has said, as robust economic
growth increases demand for transport infrastructure.
Thailand's economy, Southeast Asia's second biggest after
Indonesia, grew 6.4 percent in 2012 and some economists predict
growth of up to 5.7 percent this year.
The benchmark stock average rose nearly 36 last year
and this year is up about 9 percent, while the baht has risen to
its highest against the dollar since the 1997 financial crisis,
due to capital flows into equities, bonds and infrastructure.
The cabinet has approved a bill to borrow 2 trillion baht
to fund long-term infrastructure projects and the government has
launched a massive expansion of Bangkok's mass-transit system in
a bid to ease congestion in the city.
It aims to expand the system by more than six times, with
508 km of lines by 2029, from 79.5 km now. The bulk of the
expansion is planned for 2017, when about 146 km of new lines
are set to start running.
The four lines that BTS Group plans to bid on would require
nearly $4.35 billion of investments, with bidding slated for
2013 and operations starting in 2017. The new lines would link
directly to the SkyTrain network.
Morgan Stanley, Phatra Securities and UBS
acted as joint bookrunners for the IPO. The banks stand to earn
2.15 percent of the total in fees excluding the sponsor tranche.