Finance Ministry set to offer ‘Vayupak Fund 1

The Ministry of Finance is preparing to offer "Vayupak Fund 1". The fund is expected to have a budget range of 100 billion to 150 billion baht, with units priced at 10 baht each. The shares will be allocated using a "small lot first" method, guaranteeing returns comparable to 10-year government bonds.

Pichai Chunhavajira, minister of finance, along with Paophum Rojanasakul, deputy finance minister, the permanent secretary of the Ministry of Finance, the secretary general of the Securities and Exchange Commission (SEC), and the president of the Stock Exchange of Thailand, will jointly announce the launch of Vayupak Fund 1 on August 13. 

This fund aims to provide an additional savings option and support the development of the country’s capital market.

This initiative is intended to bolster investment in the capital market, particularly after recent declines and volatility in the Thai stock index. 

Previously, Pichet stated that the concept of boosting the Vayupak Fund by injecting an additional 100 billion baht, on top of the existing 300 billion baht, was expected to attract investors and support the capital market, as the returns are structured in a "waterfall" model, whereby returns are prioritised for the units purchased by the public.

Tibordee Wattanakul, director of the State Enterprise Policy Office (SEPO), said the ministry is preparing to conduct a market sounding with both institutional and retail investors regarding the additional offering of Vayupak Fund units. The offering is expected to take place by the end of 2024.

Preliminary details suggest that the offering will be in the range of 100 billion to 150 billion baht, adding to the existing fund size of about 350 billion baht. This will increase the total size of the Vayupak Fund to around 500 billion baht, which is the maximum limit approved by the Cabinet in 2013.

The initial offering price is set at 10 baht per unit to ensure accessibility for retail investors. The allocation will follow a "small lot first" principle, where shares are first allocated to those who purchase the minimum amount, with equal distribution in rounds until all shares are fully subscribed.

Tibordee also said the returns on these Vayupak Fund units will be guaranteed to match the yield on 10-year government bonds, with full principal repayment after 10 years. Returns will be paid twice a year. Historically, the returns on Vayupak Fund units have averaged around 4%, excluding capital gains from the sale of units.

"Given the attractive returns from previous Vayupak Fund investments, it is expected that this new offering will attract interest from investors," Tibordee said. “However, it is anticipated that a significant portion will come from institutional investors, including financial institutions, life-insurance companies, and pension funds, which have sufficient liquidity." 

The number of general investors for this offering will be set at no fewer than 35, in accordance with the original SEC regulations, despite the SEC's recent amendment reducing the requirement to 10 investors. This approach aims to ensure a diverse group of investors.

The Ministry of Finance is offering additional Vayupak Fund units to stimulate further investment in the stock market.