MFC Asset Management is planning to launch several small-scale infrastructure funds with a focus on wind or biodiesel alternative-energy projects.

But launching infrastructure funds for larger-scale megaprojects would depend on regulatory changes and government financial support, according to MFC president Pichit Akrathit.

The Securities and Exchange Commission is holding public hearings on the development of a new fund class covering infrastructure projects. Government officials hope to use infrastructure funds as a means of partially financing the 1.9-trillion-baht in new investments planned by the state over the next several years.

Dr Pichit said microprojects in the alternative-energy field typically involved investments of just 100 to 200 million baht, with an internal rate of return of 10% to 15% per year.

"Investment for small projects can start immediately. But for larger, state projects, we will have to wait until the regulations are clarified," he said.

Completed projects would be simpler to structure, as operating cash flow would already be a known factor for investors. In any case, bridge financing from the government would likely be required before an infrastructure fund took ownership of the project.

Dr Pichit said large projects, with investment periods of, say, over 30 years, would be attractive for long-term institutional investors such as the Government Pension Fund, the Social Security Fund, provident funds or life insurers.

But such investors would normally prefer established projects to ones that are just starting.

Projects such as hospitals or water-irrigation programmes, meanwhile, would likely require state subsidies to attract investors, as such programmes typically are unable to charge market prices for services due to public policies.