Thai state fund seeks 150 billion baht to help boost stock market

THAILAND’S state-controlled Vayupak Fund is starting a 150 billion baht (S$5.9 billion) offering on Monday (Sep 16) aimed at boosting the local stock market.

The offering, which will increase Vayupak’s funds under management to 500 billion baht, will run to Friday. The allocations will be announced on Sep 23, and stock purchases will begin Oct 1, according to its prospectus and financial adviser Finansa Securities. The fund plans to invest in constituents of the SET 100 Index or other local stocks with high ESG scores.

The fund will offer Series A units to both domestic retail and institutional investors, who will receive principal protection and are guaranteed an annual return of at least 3 per cent for the 10-year period – but their returns are also capped at 9 per cent. The principal will be returned after 10 years.

Assets and returns already held by the Vayupak Fund – so-called Series B units – will support the principal protection and guaranteed return, according to Finansa. Series A investors will also be paid annual returns before other holders.

Goldman Sachs expects the fund to support both sentiment and liquidity, helping attract foreign capital. The bank this month upgraded Thailand to market weight from underweight and raised its 12-month forecast for the benchmark SET Index to 1,550 from 1,450, citing expected inflows from the Vayupak Fund.

Thai stocks were among the world’s worst performers for the first seven months of 2024. They dropped as much as 10 per cent as international investors withdrew more than US$3 billion amid political turmoil and corporate scandals. Several large initial public offerings were delayed, and retail investors pushed authorities to shore up the market and tighten oversight of short selling and program trading, which some blamed for the declines.

The fundraising was an idea raised by Finance Minister Pichai Chunhavajira in June, with Thai stocks near their lows. The SET Index has rebounded about 12 per cent from its 2024 low reached in early August as Pichai rolled out tax and other incentives, and the political picture settled down.

Airports of Thailand, PTT and Krung Thai Bank are among stocks that may be bought by the expanded fund, Krungsri Securities wrote in a report last week. Other stocks with attractive valuations, growth potential and high ESG ratings are Siam Cement, CP All, Minor International, Central Retail, Kasikornbank and Gulf Energy Development, it said. BLOOMBERG