An Infrastructure Fund provides an alternative source of capital raising for the Government. Most infrastructure projects are capital intensive and require a large investment amount. Fund raising via Infrastructure Funds for investment in the revenue stream or rights to seek benefits from infrastructure projects shall not be deemed public debt and the State Enterprises remain an owner and administrators of the infrastructure projects. This shall not be deemed the sale of state enterprise assets, but utilizing future earnings and profitability of infrastructure projects to raise funding.
An Infrastructure fund also helps develop the Thai capital markets play an essential role as another alternative fund-raising channel for the government-owned projects, and give another interesting investment alternative for public investors.
An Infrastructure fund is another financing tool of the private sector apart from listing companies on the Stock Exchange or borrowing from financial institutions. The private companies may raise investment funding by taking infrastructure projects they have invested to raise funds for the development of other infrastructure projects with reasonable investment costs and utilize the project assets or profitability of the project as financing tools.
Investors in investment units of infrastructure funds shall obtain 2 types of benefit:
Proceeds of the Infrastructure Fund derived from rental, service fees and others shall be deducted by total expenditure. The remaining amount shall be the profit to be allocated to the unitholders. The SEC requires that the distribution shall not be less than 90% of the adjusted net profit (the adjustment items are the unrealized gain from the appraisal of infrastructure assets, provision for repair, maintenance or improvement of the infrastructure projects, provision for repayment of loans or obligations of the fund under the borrowing policy, etc.). The management company as the fund manager shall pay dividends at least once a year (although more frequent dividend payments such as quarterly payment or semi-annual payment is also possible). Some infrastructure projects to be invested by the Fund have the predictable and stable operating results; therefore, the investors may make long-term investment to receive dividends consistently.
As the units of the Fund are listed on the Thai Stock Exchange, investors may reap the profit (or loss) from the sale of units. However, the increase or decrease of trading prices depends on the Fund's operating results and market conditions.
* Opportunities for dividend payment and capital gain depend on the operating results of individual infrastructure project.
Source: The Securities and Exchange Commission,Thailand and The Stock Exchange of Thailand