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Thailand firms to launch hotel private equity fund aimed at global investors

Under the agreement, KTBST is the trust manager, MFC is the trustee, while DC will source, acquire, and manage the hotels acquired under the fund
By Goh Thean Eu   
October 20, 2020

Three Thailand asset managers plan to set up a hotel-focused private equity trust fund aimed at global institutional investors and high-net-worth investors, with a target return of 15% a year.

KTB Securities Thailand, MFC Asset Management and private equity firm Destination Capital plan to refurbish the hotels which the fund will acquire within the tourism-reliant country, and reposition the assets for a rebound in the industry once the coronavirus crisis ends – potentially reaping rich returns.

The companies have signed an agreement to launch the trust fund, called Descap 1, with a target return of up to 15% a year and a holding period of five to seven years, Destination Capital, which will source, buy and manage the hotels, says in a statement recently.

KTB Securities Thailand will manage the fund, and MFC will be the trustee.

According to Dr. Win Udomrachtavanich, executive chairman of KTB Securities Thailand, the fund aims to raise 2.5 billion baht (US$80.13 million) by the end of the year.

He says response from investors is “good” thanks to the “strong track record” of the three partners.

“The trust is on target to be fully subscribed by our target timeline,” he tells Asia Asset Management.

In the statement, Natthapong Na Ranong, chief executive of KTB Securities Thailand, says he believes the fund provides “an opportunity for investors keen on the tourism industry that offers a degree of flexibility with full accountability”.

According to Destination Capital Chief Executive James Kaplan, the investment strategy is to acquire urban and resort hotels, which will be renovated, repositioned and rebranded to raise their value and generate returns for investors.

“This trust will invest in strategic hospitality assets to facilitate re-employment and hotel re-openings to re-launch Thailand as a preferred global travel destination,” he says in the statement.

The Southeast Asian country’s economy has been hard hit by government-imposed travel restrictions that have battered its tourism industry.

The industry accounted for one-fifth of Thailand’s gross domestic product last year, according to government figures.

The International Monetary Fund has forecast Thailand's economy to shrink 6.7% this year after growing 2.4% in 2019.

KTB Securities Thailand is 70% owned by South Korea’s KTB Investment and Securities, with the balance in the hands of Thai investors, including Dr. Win who owns 13%.

Asset figures for the three companies are not available.