Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
According to MFC, the fund will be worth Bt4 billion ($115 million) wherein the management firm will allocate Bt200 million ($5.8 million) to each of the 20 firms to run their respective operations. Aside from raising the funds, MFC staff will also sit on the boards on each of the energy companies to co-manage the operations and control risk management.
ôWeÆll send our people to sit on the board of each selected company,ö says MFC president Pichet Akrathit. ôWeÆll have to screen the companies carefully and design the risk management well.ö
Of the selected non-listed companies, MFC Asset Management will allocate money to firms with an environment-conscious stance. Under its current plan, these energy companies will include biodiesel, biofuel, biomass, wind and solar energy firms, as well as Thai manufacturers of energy-storage batteries. The announcement follows the recent news that MFCÆs memorandum of understanding with the World Bank on support for companies whose technology and research are related to carbon credits.
Although the fund will be officially registered in March, MFC has already seen strong demand from both Thai energy companies looking for funding and potential investors and will officially begin raising funds this month. With a 10-year maturity, MFC expects that the first five years of the fundÆs duration will be a period of business development for the constituent energy companies, while the remaining five years will generate profitable income for both companies and investors. According to MFC, investors are also attracted to high yield expectations offered by the fund and the socially conscious basket that are becoming increasingly possible around the region.
ôWe plan to raise funds this month and register the energy fund next month and then expect to give the money to four or five companies a year to start their operations,ö says Pichit. ôWe also expect them to yield a satisfactory profit of about 15% on average throughout the 10-year maturity of the fund.ö
Prior to launching this energy-related strategy, MFC offered investors its Thailand Equity Fund. More recently, the firm walked the socially conscious line in launching its Tsunami Recovery Fund, which helped 20 affected firms in their recovery from the December 2004 tragedy.
The mutual fund player, which saw assets under management climb by 11% to Bt203.32 billion ($5.88 billion) in 2006, also plans to launch two more private equity funds in 2007. MFC will likely launch an additional two property funds, six foreign-investment funds (FIFs) and four equity funds this year as it aims grows its assets under management by 15% this year.
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