Aug. 11--PrimaVest Asset Management will complete transferring its 14 billion baht in assets under management to Ayudhya Fund Management by the end of the third quarter, says PrimaVest managing director Phuemphol Prasertlum.

AYF, a wholly owned unit of Bank of Ayudhya, announced the acquisition of PrimaVest in late June for 101 million baht. AYF will purchase 100 percent of PrimaVest's shares from BBTV Equity, Ayudhya Allianz CP and Bank of Ayudhya. After the transaction, AYF's shareholding structure will change to BBTV holding 13 percent, AACP 10 percent and Bank of Ayudhya 77 percent.

PrimaVest currently manages 14 billion baht in assets through 36 funds, said Mr Phuemphol. AYF currently manages about 30 billion baht in assets.

Consolidating the firms will cut costs and generate gain for shareholders.

"It may be a good opportunity for the major shareholders to merge, considering the cross-shareholdings involved and the potential to reduce operating costs and create economies of scale in fund products," said Mr Phuemphol.

PrimaVest was founded in 1997 at the start of the financial crisis. Its major shareholder, Sitca Finance, collapsed during the Asian economic crisis.

The fund management company resumed operations in 2001 with BAY and the Ratanarak family, the dominant shareholder of the Bank of Ayudhya, as major shareholders. But the company has continued to run accumulated losses, losing 16 million baht last year.

Mr Phuemphol said growth prospects for the fund industry were still strong, albeit with heavy competition.

Small operators will likely face consolidation within the industry, and companies with banks as major shareholders will have an advantage in terms of distribution networks, he said.

According to the Association of Investment Management Companies, 21 asset managers had 1.75 trillion baht in assets under management as of July 24, compared with 1.533 trillion at the end of 2008.

PrimaVest yesterday launched the Sala @ Sathorn Property Fund, a 1.67-billion-baht open-ended freehold property fund investing in commercial office properties on Sathon Road. The fund offers a guaranteed return of 25 million baht for the first two years, with an expected rental yield of 7.5 percent per year once occupancy reaches 80 percent to 90 percent. Occupancy at the building now is 50 percent, with a rental rate of about 600 baht per square metre.

Units of SSPF closed yesterday at 7 baht on thin volume. Par value is 10 baht per unit.

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