The Finance Ministry is preparing to conduct a market sounding for a new Vayupak Fund and expects to offer investment units for sale by the end of this year.
According to Tibordee Wattanakul, director-general of the State Enterprise Policy Office, the initial size of the new Vayupak Fund will be 100-150 billion baht. When combined with the existing Type B Vayupak Fund in which the Finance Ministry and government agencies hold shares amounting to 350 billion baht, the total size of the funds will increase to 500 billion baht, he said.
There are two Vayupak Funds: Type A allows the public to purchase investment units and has a value of 150 billion baht, while Type B consists of investment units held by the ministry and state agencies with a combined value of around 350 billion baht.
Mr Tibordee said the initial offering price for the new investment units will be 10 baht per unit for retail investors, without a minimum or maximum purchase limit.
Share allocation will follow the small lot first principle, he said.
Retail investors are likely to purchase a portion of the units, said Mr Tibordee, with the majority bought by institutional investors, including financial institutions, life insurance companies and government pension funds.
He said the new fund will guarantee returns comparable to 10-year government bond yields.
If investors hold the units for the full 10 years, they will receive 100% of their principal back, with returns paid out twice a year, said Mr Tibordee.
In the past, annual returns on investment in Vayupak Fund units have averaged around 4%, not including capital gains.
This positive track record should generate investment interest in the new funds, he said.
Various institutional investors have indicated interest, said Mr Tibordee.
The ministry is offering additional Vayupak Fund units to inject more liquidity in the local stock market, he said.
Finance Minister Pichai Chunhavajira said he feels upbeat that the new units will stimulate investment in the bourse.
The scheme is already generating interest among investors, as the government could add another 100 billion baht to the new fund, said Mr Pichai.
Finance permanent secretary Lavaron Sangsnit previously said expanding the Vayupak Fund would involve Type B, which can be done quickly as it does not require a new filing.
Type B serves as a guarantee for public investment returns in Type A units, which offer a minimum return of 3%. If the return of Type A is less than 3%, the return from Type B is added to total 3%.
The Type B fund significantly increased in value recently, he said.
The ministry plans to allocate 100-150 billion baht to establish a new fund and sell the units to the public. With the combined funds from the revamped Thai ESG scheme and the new Vayupak Fund, more than 200 billion baht is estimated to flow into the market, said Mr Lavaron.
The ministry is making the investment conditions for Thai ESG funds more attractive.
The improved conditions were approved by the cabinet and are in effect, increasing the investment limit eligible for personal income tax deductions from 30% of income or up to 100,000 baht. The new limit is 300,000 baht, while the holding period required for tax deductions is slashed from eight years to five.
Vitai Ratanakorn, president of Government Savings Bank, said based on the Vayupak Fund's long-term investment principles, the bank considers these investments to be viable.
Given their low prices and the expected improvement in the economic outlook, Thai stocks are worth buying, he said. If the new units in the Vayupak Fund follow the original structure offering guaranteed returns, this should be considered a good investment, said Mr Vitai.
"Based on the fund's investment principles, this is a good opportunity. However, we are still waiting the learn the details of the project," he said.