Bangkok SkyTrain-Backed Fund Raises $2.1 Billion in IPO

A fund backed by Bangkok’s SkyTrain raised about 62.5 billion baht ($2.1 billion) in Thailand’s biggest initial public offering.

BTS Rail Mass Transit Growth Infrastructure Fund sold 5.79 billion units at 10.8 baht apiece, BTS Group Holdings Pcl said today. The units were marketed at between 10.4 baht and 10.8 baht, according to a March 15 filing. The fund will buy rights to fare revenue from the SkyTrain, an elevated network that runs through central Bangkok.

Yield-seeking investors in Southeast Asia have snapped up IPOs of assets, including real estate investment trusts, that pay high dividends and generate cash flow from properties or other infrastructure. Companies have raised at least $5.1 billion in the region over the past year from IPOs of such assets, about twice the amount raised in the prior 12 months, data compiled by Bloomberg show.

“Within high yield investment structures like REITs and funds, this IPO provides diversification,” said Alan Richardson, a Hong Kong-based fund manager who helps oversee about $110 billion for Samsung Asset Management Co. “It’s seen as a new avenue, new asset class to consider. It provides a higher yield than government bonds, and higher growth opportunities if there’s more injection of assets.”

Thailand’s Largest

The fund’s distribution yield is expected to be about 5.8% in the year ending March 2014, BTS said. About 43 percent of the fund will be owned by foreign investors, while BTS will own one-third. BTS plans to use proceeds from its sale of the fare rights to extend the rail network.

The IPO surpasses a sale by Thai Oil Pcl, which raised 32.5 billion baht in October 2004, to become Thailand’s largest, data compiled by Bloomberg show. It is Southeast Asia’s largest IPO since Felda Global Ventures Holdings Bhd., the Malaysian palm oil producer, raised $3.3 billion last June, the data show.

The SkyTrain, consisting of 32 stations in central Bangkok 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 IPO prospectus. It posted sales of 4.3 billion baht for the period, up from 3.5 billion baht a year earlier.

BTS rose 0.6 percent to to 9.10 baht as of 9:57 a.m. in Bangkok today. The shares have gained about 27 percent this year, outpacing the 9 percent gain of the country’s benchmark SET Index.

Thai citizens are driving equity gains as the economy grew at the fastest pace since at last 1993 in the fourth quarter and local incomes climb. The stock market was Asia’s second-best performing benchmark in 2012 with a 36 percent increase. The country last week increased its gross domestic product growth forecast for 2013 to 5.3 percent from 5 percent.

The fund is scheduled to list on the Bangkok stock exchange on April 19. Morgan Stanley, UBS AG and Phatra Securities Pcl managed the offering.