True Corporation (True), Thailand’s third largest telecommunications company, has applied to list a telecommunications infrastructure fund in what could be Asia’s second-largest initial public offer (IPO) so far this year and the largest infrastructure IPO in Thailand, according to documents obtained from the Stock Exchange of Thailand (SET).
The date of the IPO has not been set, but the company is hoping to raise at least THB 70 billion (€1.7 billion; $2.2 billion) from the offering. A source close to the matter told Infrastructure Investor the approvals should be through within a month, at which time the date for the IPO can be set.
True Corporation and its subsidiaries will be allowed to own no more than one third of the new infrastructure fund, which will be Thailand’s second infrastructure fund after the The BTS Rail Mass Transit Growth Infrastructure Fund raised THB 62.5 billion in April. Two thirds of the expected THB 70 billion is slated to come from public market investors.
However, True has already designated a large amount of its own assets to sell and lease to the fund once it is raised, including 13,000 telecommunications towers -totaling THB 15 billion – 1.2 million ports of broadband networks, and 45,000 kilometres of core fibre optic cable. True has also applied to sell the fund the right to receive equipment rent from 13,500 of its 3G network base stations, according to the SET documents.
The Siam Commercial Bank Asset Management, the captive asset management arm of Thailand’s largest commercial bank, has been appointed as the management company for the new fund.
Although the assets True is selling to the fund are all telecommunications, the fund is not technically limited to that sector. “The fund’s principal investment mandate is to invest in infrastructure which have the potential of long-term of growth,” the SET documents stated.
The documents also revealed that True plans to use the proceeds of the IPO to pay back much of the company’s debt. True has been operating at a loss since late 2011, according to local media reports, for which the company has blamed rising expansion costs.
True’s board of directors deemed the infrastructure fund “reasonable and beneficial to the company” because it will enable the telecommunications firm to re-focus on its core business, enable long-term restructuring, and significantly reduce True’s debt.
True declined to comment because of government restrictions.