Venture capital fund to lend helping hand to SMEs

Venture capital fund to lend helping hand to SMEs

SET president Kesara Manchusree (left), KTB senior vice-president Songpol Chevapanyaroj (centre) and NSTDA vice-president Narong Sirilertworakuland at the launch of the SME Private Equity Trust Fund.
SET president Kesara Manchusree (left), KTB senior vice-president Songpol Chevapanyaroj (centre) and NSTDA vice-president Narong Sirilertworakuland at the launch of the SME Private Equity Trust Fund.

A venture capital fund worth 2.3 billion baht is to be launched this year, aiming to help small and medium-sized enterprises (SMEs) access financial sources to expand their businesses, says Krungthai Bank (KTB).

The fund is a collaboration between three parties -- KTB, the Stock Exchange of Thailand (SET) and the National Science and Technology Development Agency (NSTDA) -- and is expected to be officially launched in the third quarter, said Songpol Chevapanyaroj, senior vice-president in charge of the global transaction banking group at KTB.

The fund came about after the three parties signed a memorandum of understanding last year after the cabinet ordered them to find a solution to help operators of SMEs, especially those who have a strong position and want to expand their business further.

"The venture fund is named the SME Private Equity Trust Fund and Krungthai Bank and One Asset Management Ltd will be the fund managers," Mr Songpol said.

According to the cooperation, KTB will put in 2 billion baht, the SET 200 million baht and the NSTDA 100 million baht.

The fund is aimed at helping companies that use high technology to create innovative products and SMEs that want to expand their business but have difficulties accessing loans from commercial banks.

Mr Songpol said the venture fund will put in the money as a partner of the SMEs. It will invest in the range of 20-150 million baht in targeted businesses, which are food, agriculture and agricultural processing, medical equipment and aero parts.

With this venture style of investment, the SME Private Equity Trust Fund will also get returns based on its equity ratio in the companies.

He said Japanese and Korean investors have also expressed an interest in investing in Thai SMEs. However, they would do so on a case-by-case basis rather than pouring money into the venture fund.

SET president Kesara Manchusree said she expected the venture fund to help extend financial support to around 100 SMEs when it is launched, which would help boost the Thai economy eventually.

Besides, the venture fund should also help increase the number of SMEs that want to expand their business and launch initial public offerings on the Thai bourse. which would help make the SET trade more active.

"SMEs that want financial support to expand their business can propose their business plan to the venture fund, which would consider the merits of each applicant. Initially, we aim to focus on SMEs that are in a strong position, those with a revenue of 400-600 million baht a year," she said.

In the meantime, Finance Minister Apisak Tantiworavong will seek cabinet approval for the new tax measures for aiding SMEs today.

The measures are expected to come into effect immediately and run until the end of 2018.

There will be two measures to be approved today, including a tax break on expenses for large corporations that help SMEs, and a tax break for investments in social development projects.

A senior official at the Finance Ministry who asked to remain anonymous said the items that are eligible for tax deductions under the new measures would require a letter of guarantee from participating organisations including the Thai Chamber of Commerce, the Federation of Thai Industries and the Thai Credit Guarantee Corporation.

There are eight types of social development projects that will be eligible for the tax privileges, such as renewable energy for communities in rural areas, community waste-water treatment and roads in rural areas as well as community irrigation systems.

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