BTS Group’s Sky Train Fund Seeks $2.1 Billion in Thai IPO

A fund backed by revenue from Bangkok’s sky train is raising as much as 62.5 billion baht ($2.1 billion) in Thailand’s biggest initial public offering.

BTS Rail Mass Transit Growth Infrastructure Fund is offering 5.79 billion units at 10.4 baht to 10.8 baht apiece, according to a Securities and Exchange Commission filing. The fund will use the proceeds to buy rights to net fare revenue from the sky train from parent BTS Group Holdings Pcl. (BTS)

At $2.1 billion, the deal would surpass Thai Oil Pcl’s October 2004 IPO, which raised 32.5 billion baht, or about $1.1 billion at current exchange rates, data compiled by Bloomberg show. BTS Group has climbed 24 percent in Bangkok since Dec. 31, adding to last year’s 63 percent rally and giving the company a market value of 97.9 billion baht.

“The company has a very good outlook with strong ridership growth,” Jintana Mekintharanggur, who helps oversee about $170 million as the director of equities investment at Manulife Asset Management Co. in Bangkok, said today by phone. “The worsening traffic and network extension will continue to boost passenger and revenue growth.”

The BTS sky train, consisting of 32 stations with a combined track length of 32.7 kilometers (20.3 miles), carried 176 million passengers in the fiscal year ended March 31, 2012, according to the prospectus. It posted sales of 4.3 billion baht for the period, up from 3.5 billion baht a year earlier.

BTS plans to use proceeds from its sale of the sky train fare rights to invest in future mass transit projects as well as to buy a third of the fund, the document shows.

Thai citizens are driving equity gains as the economy grew at the fastest pace since at least 1993 in the fourth quarter and local incomes climb. The SET Index (SET) is up 15 percent this year, beating the MSCI Southeast Asia Index (MXSO)’s gain of 4.7 percent, and it was Asia’s second-best performing benchmark in 2012 with a 36 percent increase.

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