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The 10-year closed-end fund will invest in four or five local unlisted energy companies annually through investments between Bt50 and Bt500 million ($1.6-16 million), with the expectation that these companies would either be ready to list on the Stock Exchange of Thailand (SET) or the nationÆs Market for Alternative Investment. It is currently talking to around 20 energy-related companies to include in the fund.
From the onset, MFC has signed up a slew of Thai institutional investors from the corporate space, which includes PTT, PTT Chemical, Thai Oil, Bangchak Petroleum and Ocean Life Insurance. On the government side, the new fund has also signed an investment agreement with ThailandÆs Social Security Fund, the Government Savings Bank and the SET.
Additionally, the MFC Energy Fund will also be granted technical assistance and possibly investment from the World Bank.
MFC is targeting an internal rate of return of 15% per year for the fund, which it believes it will achieve through the growth potential of the selected unlisted companies. Amongst this sector, the firm has touted unlisted companies from such industries as wind power, hydropower, solar energy, bio-diesel, ethanol, bio-mass û and from other related activities such as innovative energy storage.
The fund will also feed into a regional energy fund which MFC plans to launch next year. This future venture fund will likely invest exclusively into unlisted energy companies in ASEAN nations and act as a first step to eventually listing some of the selected firms.
The new launch is the latest stanza in what is turning out to be a very socially conscious push for MFC Asset Management. In recent times, the firm launched its Tsunami Recovery Fund, which helped 20 affected firms in their recovery from the December 2004 disaster.
Investors still favour private equity assets for their higher growth, better governance structures, and diversification potential.
The recent focus on greenwashing has put bond issues under greater scrutiny. However, some market participants believe this risks paralysis by analysis.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.