The local asset management industry will face a new challenge this year in the form of infrastructure funds.
Their large size means intense competition among large mutual fund companies, leaving small ones scrambling for a niche in order to survive, said Jotika Savanananda, president of SCB Asset Management (SCBAM).
"Eventually, we must play on the field [infrastructure funds] too," said Mrs Jotika.
Due to the huge capital required for this type of fund, only one can easily catapult its manager to the top rank in terms of assets under management.
Mrs Jotika said normally the assets under management of a mutual fund company increase by around 30-50 billion baht on average annually.
But once infrastructure funds are allowed to be set up this year, adding one to its portfolio could increase its assets several-fold, she said, citing as an example the planned BTS fund worth 60 billion baht.
"It's different from bond or money-market funds, which will increase the AUM of an asset management company gradually," Mrs Jotika said.
"It's clear infrastructure funds will be popular this year, given the strong support from the government, as well as the market regulator, which encourages companies to finance their projects through the funds."
She said to maintain their market shares, mutual fund companies must focus on capturing the infrastructure fund market, while this type of fund requires various participants to realise a deal.
Under the current scenario, large asset management companies will be the least affected because as subsidiaries of commercial banks, they can rely on their parent firms to help clinch infrastructure fund deals.
Small companies will struggle to survive by seeking niche markets.
Sandwiched between these two groups are medium-sized companies, which must be strong enough to resist the takeover pressure from the bigger players.
In the future, mergers and acquisitions will be a major trend in the asset management industry, instead of licence purchases like in the past.
This is attributed to the fully liberalised market which allows foreign players to set up business and apply for licences by themselves.
Besides infrastructure funds, several property funds will be launched this year as real estate investment trusts (REITs) will supersede them next year.
Mrs Jotika expects the REITs to take shape in the second half of next year.
SCBAM is preparing to act as lead manager or trustee for REITs.
"Property funds will no longer be set up once we have REITs. The REITs will be very popular as a lot of new mutual funds will be set up to invest in this type of fund," said Mrs Jotika.
Yesterday, SCBAM and The Erawan Group co-launched the Erawan Hotel Growth Property Fund (ERWPF) to invest in two budget hotels, Ibis Patong and Ibis Pattaya, which opened in 2008.
In 2012, Ibis Patong had revenue of 114.2 million baht and Ibis Pattaya booked 106.3 million.
The hotels guarantee minimum revenue for the fund in the first four years of 111.5 million baht per year.