Bangkok SkyTrain IPO shows growing faith in Asian infrastructure

12 April 2013

In what is being seen as a major confidence boost for mass transit infrastructure in Southeast Asia, a fund controlled by the operator of Bangkok’s SkyTrain launched on the Thai stock exchange last week for a record-breaking $2.13bn.

It’s the biggest IPO ever for a Thai company and Asia’s biggest public listing so far this year.

SkyTrain operator BTS Group Holdings started the elevated rail system in 1999 and even though it only covers 23km in downtown Bangkok, it is very popular, carrying 530,000 passengers each day. 

The now-public BTS Rail Mass Transit Growth Infrastructure Fund (BTSGIF) will purchase a stream of SkyTrain transit-fare revenue from BTS.

The BTSGIF will use the proceeds from the IPO to expand the SkyTrain rail system by building feeder lines to its core network in Bangkok’s notoriously car-congested downtown.

SkyTrain now runs only 23km but is very popular in congested Bangkok. (Credit: BTS)

The Thai government has said it plans to expand rail coverage in greater Bangkok to 508km by 2029, up from just 79km now.

Even before the IPO was launched, 38% of the shares had been sold to 22 so-called "cornerstone" investors including Morgan Stanley Investment Management and Schroder Investment Management, according to a filing on the Thai stock exchange last month.

A clear indication of investors’ enthusiasm for mass transit infrastructure, the launch is being seen as a pathfinder for Thailand and beyond.

The New York Times said BTS was "cashing in on investors’ renewed faith in rising wealth and continued urbanization" in Thailand.

And The Wall Street Journal wrote that it "could provide a road map for regional transport operators in need of funds".

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