2011 International Conference on Alternative Energy in Developing Countries and Emerging Economies
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• Interested in companies and projects with more
mature technology, including those preparing to
raise capital on public stock exchanges (‘pre
IPO’), demonstrator companies, or under-
performing public companies.
• Shorter investment horizon, 3-5 years
• Higher return requirement, 25% IRR
Infrastructure Funds
• Funds drawn from a range of institutional
investors and pension funds
• Target ‘infrastructure’ i.e. an essential asset,
long duration, steady low risk cash flow
• Interested in roads, railways, power generating
facilities
• Medium term investment 7-10 years
• Low risk and return, 15 % IRR
Pension Funds
• Typical investments include:
- Public equity (via stock markets)
- Corporate and government bonds
- Real estate
- Inflation-linked assets (such as commodities,
inflation linked bonds, infrastructure and energy,
forest land)
- Private equity
- Cash and cash equivalents
VC, PE and funds become key players in the
development of renewable energy technologies. In
2008, these group of financial institutions accounted
for $19.3 billion or 12.5 percent of total global
sustainable energy investment. The amount increased
43 percent on the 2007 investment. However, VC,PE,
and funds are not major equity investors in Thailand.
Actually, Thailand’s first private equity fund
focusing on energy (mainly renewable energy) was
just established by MFC Asset Management in 2007
TABLE VIII
M
FC ENERGY FUND
I V . A
S S E S S I N G T H E R O L E S O F
F I N A N C I A L I N S T I T U T I O N S I N T H E
I I I .
D E V E L O P M E N T O F T H E
R
E N E W A B L E E N E R G Y I N D U S T R Y
I N T H A I L A N D
To assess the roles of financial sector in the
development of renewable energy industry in
Thailand, we conducted research on the internet,
newspapers’ articles, financial institutions’ annual
reports, and financial institutions’ websites.
Moreover,
we
interviewed
with
financial
professionals, policy makers and developers who are
experts in renewable energy finance in Thailand. The
research outcomes are demonstrated as the following:
Commercial banks’ activities related to renewable
energy industry
Our research scope includes the top 13 largest
banks, accounting for 96 percent of total assets held
by all commercial banks, in Thailand. We found that
most banks have participated in providing financial
solutions to renewable energy industry. 8 out of 13
banks take partnership in the Renewable
Energy/Energy Efficiency Revolving Fund Program
initiated by DEDE, the Ministry of Energy. However,
the level of self-initiated participation is still
moderate. The majority of loans, on top of joint-
government sponsored program, are concentrated in
top 5 largest banks, all local. Further, the volume of
loan has just started to increase to the billion-Baht
level for the past few years. Therefore, this might
indicate that the banking sector, although taking part
in government-led programs, do not play a crucial
role in developing renewable energy in Thailand at
this stage. However, going forward, there is a high
potential that banks will participate more and help
scale up and commercialize the renewable energy
technologies.
Recent lending climate for renewable energy
In 2010, a leading lender for the renewable energy
industry in Thailand, announced its long-term plan to
invest in renewable energy project totaling Baht
26,000 – 53,000 million. The amount accounts for
15% under the forecast private investment stream
under the 15 year REDP. Moreover, the bank opened
credit line of Baht 2,000 million for energy saving
and conservation projects. Ultimately, KBank hopes
to increase lending transactions for renewable energy
from 5% to 10% of its total annual lending portfolio.
The estimate market size of corporate lending
transactions for green projects in 2010 was around
Baht 30,000 million. In the same year, KBank
approved new loans for renewable energy by Baht
