The Association of Investment Management Companies (AIMC) has resolved to include CP Axtra (CPAXT) shares on the watch list (WL) for Thai ESG and Thai CG mutual funds, given concerns over corporate governance regarding the company's recent multibillion-baht investment.
Chairwoman Chavinda Hanratanakool said the decision to put CP Axtra on the watch list, which heightened the level of caution regarding investments, was made unanimously at the AIMC meeting this week.
The association will closely monitor developments, particularly the issues flagged by the Securities and Exchange Commission (SEC), which has requested clarification from the wholesale and retail business unit of the Charoen Pokphand (CP) Group.
CP Axtra on Dec 16 officially informed the Stock Exchange of Thailand (SET) of an investment worth billions of baht in The Happitat in The Forestias multi-use real estate project of Magnolia Quality Development Corp (MQDC), which is also part of the CP Group.
The operator of retail outlets under the Makro brand, a wholesale business under Lotus’s, later clarified that it is not investing in The Forestias real estate project, but rather Lotus’s Mall Bangna under the trademark The Happitat.
The SEC instructed CP Axtra to clarify information on the joint investment in The Happitat project through a joint investment in its subsidiary Astra Growth Plus (AGP) as the transaction is related to the CP Group, its parent company.
The WL designation does not prohibit or restrict investment in CP Axtra shares. Instead, it leaves decisions to fund managers, advising them to proceed with caution until the SEC delivers its conclusions on the joint venture’s impact on retail investors and unitholders.
“Fund managers retain the discretion to hold or invest in CP Axtra shares based on their judgement, particularly if share prices align with investment strategies. AIMC is also reviewing its criteria for listing shares on the WL to ensure comprehensiveness and plans further discussions after the SEC releases its findings,” Mrs Chavinda.
“While awaiting the SEC’s review, funds can continue to hold or invest in CP Axtra shares if deemed appropriate.”
On Tuesday, CP Axtra reaffirmed that the establishment of AGP aims to invest in the company’s core business, which includes the investment in the Lotus’s Mall Bangna under the trademark The Happitat Project.
“The company reaffirms that it has no plans to invest in other projects related to MQDC,” CP Axtra said in its filing to the SET.
An analyst from Finansia Syrus Securities welcomed the AIMC’s decision, suggesting it may allay concerns regarding institutional investors’ exposure to CP Axtra’s equity and debt instruments.
Win Phromphaet, executive chairman of Kasikorn Asset Management, said individual investment management firms could use the AIMC resolution as a guideline while exercising their own discretion.
