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Thai state power firm plans $627 mln IPO

State-owned Electricity Generating Authority of Thailand (EGAT) plans to raise up to 20 billion baht ($627 million) by listing an infrastructure fund in the first quarter of 2015, delayed from this year due to domestic political unrest.

The proceeds from the initial public offering would be used to finance construction of new power plants and transmission lines, EGAT Governor Soonchai Kumnoonsate told reporters on Tuesday.

EGAT will be the first state enterprise to test investor appetite in the capital markets and could encourage other state companies to follow suit, analysts said.

The listing plan is subject to approval from the finance ministry and the cabinet, Soonchai said, adding EGAT appointed Siam Commercial Bank, the country’s third largest lender, as financial adviser for the launch of the fund.

Krungthai Asset Management Co, a unit of state-owned Krung Thai Bank, was chosen as manager of the fund.

EGAT, the country’s largest power producer with installed capacity of 15,000 megawatts, will transfer revenue and future cash flow of a major power plant to the 15-25 year fund.

Earlier this month, the military government approved EGAT’s plans to invest in three power plant projects worth a combined 160 billion baht.

The firm has said it aimed to spend about 400 billion baht during 2014-2018 to build new power plants and upgrade transmission networks.

With assets of more than $16 billion, EGAT is the sole power buyer, which purchases electricity from private power firms and neighbouring countries. It also owns and operates a high-voltage transmission network covering all parts of the country.

EGAT is among several Thai firms that raises money through such funds. In 2013, BTS Group raised $2.13 billion via the IPO of a similar-styled infrastructure fund. That success has encouraged other firms to tap equity capital markets.

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