BTS’s Sky Train Fund Seeks $2.1 Billion in Biggest 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.

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 plans to invest in mass transit projects, including extensions to the existing rail network, as the government seeks to overcome transport bottlenecks in the capital.

“You should see how bad the traffic is in Bangkok and how important the BTS’s elevated trains are,” Jintana Mekintharanggur, who helps oversee about $170 million as the director of equities investment at Manulife Asset Management Co., said today by phone. “The worsening traffic and network extension will continue to boost passenger and revenue growth.”

BTS shares rose 2.8 percent as of 2:58 p.m. in Bangkok, poised for the highest close in 12 years. The stock has climbed 27 percent since Dec. 31, adding to last year’s 63 percent rally and giving the company a market value of 100 billion baht.

Network Expansion

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 for potential investments in the 25-kilometer extension of the sky train’s green line, the 36-kilometer extension of the pink line, and a light-rail connecting Bang Na with Suvarnabhumi Airport, it said. It will also buy a third of the infrastructure 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 is up 15 percent this year, beating the MSCI Southeast Asia Index’s gain of 4.7 percent, and it was Asia’s second-best performing benchmark in 2012 with a 36 percent increase.

The fund will offer 3.32 billion units to Thai investors, including 1.93 billion units to BTS, from March 29 to April 3, according to the document. International investors will be offered 2.47 billion units between April 9 and April 11. The price will be set on April 5 and the fund is scheduled to list on the Thai stock exchange on April 19.