Amata B Grimm to Fund Power Plants with Infrastructure Fund

Amata B Grimm Power Group expects the money it raises from selling units of its infrastructure fund (ABPIF) will finance two of the 11 power plants it plans to set up by 2019.

Each plant will require an investment of Bt2.5 billion, so this funding source could support about two of them, as ABPIF is worth Bt6.3 billion to Bt6.6 billion, said group president Preeyanart Soontornwata.

She said the group would need to raise a lot of funds after contracting with the Electricity Generating Authority of Thailand (Egat) to operate 16 power plants with combined capacity of 2,000 megawatts by 2019, up from five currently with capacity of 613MW.

The group is constructing a sixth plant in Amata City Industrial Estate in Rayong province, which will bring its total generating capacity to 733MW by the end of this year.

Amata B Grimm needs Bt70 billion to construct the remaining 11 plants, and if its infrastructure fund is a success, it may consider raising funds via this instrument apart from bank loans, Preeyanart said.

The company next week will sign an agreement for loans totalling Bt10 billion from four banks – Kasikornbank, Land and Houses Bank, Mizuho Bank and HSBC – to support the construction of two power plants, said chief financial officer Nopdej Karnsuta.

Amata B Grimm is one of the largest of the small power producers in Thailand, and its infrastructure fund is the country’s first electricity fund. Unit subscriptions will be offered from September 9-11 at Bt11 per unit. The final price will be announced on September 14-15. The minimum investment required is Bt2,000.

The fund units will start trading by the end of this month. Amata will buy back around 27.5 per cent of total unit issuance.

Amata B Grimm will bring the two power plants it has operated for 11 years as assets into the infrastructure fund as they bring in steady revenue and profits from selling electricity to Egat and manufacturers in Amata Nakorn Industrial Estate.

In the past four years, those two plants, with combined capacity of 350MW, have generated annual revenue of Bt7 billion to Bt8 billion and net profit of Bt550 million to Bt600 million per year.

ABPIF has a tenor of nine years in line with the remaining power-purchase contract with Egat, Preeyanart said.

Suradech Kietthanakorn, first senior vice president for multi-corporate business at KBank, the financial adviser and underwriter, said investors would get a return of 15.5 per cent in the first year, consisting of dividends of 7.2-7.5 per cent per annum and 8 per cent as capital reduction.

Compared with returns from equity and mutual funds, he said an infrastructure fund, especially based on electricity generation, was the proper choice for investors who wish to avoid market volatility and enjoy a high return.

Dividends from listed electricity companies are 4.5-4.8 per cent per annum on average, and the return of “AAA”-rated corporate bonds is 6.5 per cent.