Bangkok Commercial Asset Management's (BAM) initial public offering (IPO) is expected to help lower debt of the Financial Institutions Development Fund (FIDF), its major shareholder, at a quicker pace.
BAM's IPO on the Stock Exchange of Thailand (SET) is forecast to reduce the FIDF's debt by 32 billion baht, bringing down total debt to 700 billion, said Veerathai Santiprabhob, governor of the Bank of Thailand, on behalf of FIDF's chairman.
BAM, the country's largest asset management company, last month allocated 1.54 billion IPO shares to the general public and set the offering price at the upper range of indicative price at 15.50-17.50 baht.
Of the total IPO shares, 1.26 billion were sold by the FIDF and 280 million were newly issued shares.
The company has reserved up to 230 million shares for over-allotment.
Upon the IPO completion, FIDF's shareholding in the asset management company was diluted to 46-49%, depending on greenshoes rights.
The FIDF's total debt amounted to 1.14 trillion baht after receiving a transfer from the Finance Ministry on Jan 27, 2012.
A few years ago the fund estimated the debt incurred from bailing out troubled financial institutions during the 1997 financial crisis would be repaid in less than 15 years, instead of the 24 years previously scheduled.
Proceeds from the sales of BAM shares held by the rescue fund will be used to repay its debt, and this will help it pay off the debt faster, said Mr Veerathai.
Commercial banks are taxed 0.47% of their deposits, of which 0.46% goes to repay the rescue fund's debt, and 0.01% goes to the Deposit Protection Agency.
BAM's privatisation will help increase flexibility of the asset management company, he said.
Mr Veerathai insisted the FIDF will retain a major stake in BAM after keeping silent for the IPO period on the stock market.
"The FIDF has no policy to sell [additional] shares and will keep its shares for dividends," he said.
According to listing regulations, the silence period, a duration during which major shareholders are prohibited from selling their shares, lasts for 1½ years.
BAM's first day of trading is set for Dec 16.