- VAYU1 unit offered for public subscription from Sep 16-20, aiming to raise up to 150 billion baht.
- Institutional investor subscription for VAYU1 from Sep 18-20.
- Focus on mid/small-cap stocks with high ESG ratings, offering a 10-year guaranteed return and dividends based on performance.
- Fund portfolio to include securities from Oct 1, with listing on Thai stock market by Oct 15.
Thailand’s public fund, known as ‘Vayupak‘, is set to offer its Type A unit, VAYU1, for public subscription from September 16 to 20 with a total valuation not exceeding 150 billion baht (approx. $4,400 million), as disclosed by Mr. Lavaron Sangsnit, Permanent Secretary of the Ministry of Finance, to ‘Kaohoon.’
This initiative marks the commencement of the government’s strategy to attract fund inflows, notably from foreign investors, aiming to revitalize the underperforming Thai capital market compared to global counterparts this year.
Despite global market pressures due to disappointing economic data from China and the US, Thailand’s stock market exhibited resilience on Wednesday by closing in positive territory. The market rebounded after King Maha Vajiralongkorn endorsed Prime Minister Paetongtarn Shinawatra’s cabinet lineup ahead of schedule, fueling speculations of an early unveiling of the PM’s economic policies to potentially stimulate domestic and foreign investments.
The introduction of VAYU1 is expected to significantly bolster the stock market by targeting to raise 150 billion baht. Unlike the existing Vayupak Fund 1’s focus on blue chips and SET100 Index, VAYU1 will concentrate on mid and small-cap stocks, particularly those with high ESG ratings. The new unit guarantees a minimum return over its 10-year tenor and will distribute dividends based on its actual operating performance.
There are 34 listed companies in the Thai stock market that have AAA rating, which is considered the highest rating for ESG score, namely; ADVANC, AJ, AMATA, BANPU, BAY, BCP, BGRIM, BKI, BPP, CKP, CPALL, CPAXT, CPF, CENTEL, KBANK, KTB, KTC, M-CHAI, OR, PR9, PTT, PTTEP, PTTGC, SABINA, SCC, SCGP, STA, STGT, TFMAMA, THCOM, TISCO, TOP, WHA and WHAUP.
Furthermore, VAYU1 incorporates a distribution waterfall mechanism, granting Type A investors priority in receiving capital refunds based on the fund’s Net Asset Value (NAV) over Type B unit holders (Ministry of Finance).
Institutional investors can subscribe to the new unit of Vayupak Fund from September 18 to 20. Following the fund’s capital raise, securities will be added to its portfolio starting October 1, with the unit scheduled to debut on the Thai stock market on October 15.
Earlier, Pakorn Peetathawatchai, the President of the Stock Exchange of Thailand (SET), investing in the Vayupak Fund 1 at present highlights a favorable opportunity. This is attributed to the Thai bourse’s low price-to-earnings (PE) ratio, which is lower than historical levels and also compares favorably to neighboring countries.
Asia Plus Securities noted that political stability in Thailand has returned, allowing for the continuous implementation of the 2024 and 2025 budgets by the government. The analyst anticipates significant growth for the country, leveraging a low base effect, with GDP in the second half of 2024 poised to expand by 3.5% following a 1.9% growth in the initial six months. The introduction of the digital wallet scheme is expected to further drive economic momentum and foster growth in the coming periods.
Despite a modest net purchase of Thai stocks amounting to THB 4.1 billion this year, institutional investors are poised to potentially expand their holdings in two specific sectors, including
The new ESG Fund, which started on August 16, 2024 and has already attracted capital inflows of approximately THB 3.4 billion, with anticipated inflows projected to reach THB 20-30 billion in the latter half of the year.
The upcoming introduction of the new Vayupak Fund within the next 1-2 months, which is expected to attract substantial investments, with expected inflows ranging between THB 100-150 billion.
Following these developments, the analyst has identified and given a “Speculative-Buy” recommendation for 10 stocks expected to gain from increased investments from the ESG AAA Rating and inflow from Vayupak Fund. These stocks include PTT, BCP, KTB, ADVANC, SCC, KBANK, CRC, CPF, SCGP, and OR.
About Vayupak Fund
The Vayupak Fund is a public fund in Thailand that was established to manage the country’s state-owned assets with the goal of generating returns for the government while supporting the development of the nation’s economy.
The fund operates as a type of mutual fund and invests primarily in shares of state-owned enterprises (SOEs) and other government-related assets. The idea behind the Vayupak Fund is to enhance the efficiency and performance of these assets while providing a steady stream of income and capital gains to the government. The fund is seen as a tool to encourage better corporate governance and profitability among the SOEs included in its portfolio.
