Bankers are set to kick off the pre-marketing today of IGB Reit, a retail real estate investment trust that is aiming to raise M$837.5 million ($270 million) from an initial public offering in Malaysia. The listing is scheduled for mid-September.
The latest deal comes after a series of recent Reit IPOs in the region amid a general appetite for yield, a source said yesterday. Ascendas Hospitality Trust last month priced a $364 million Singapore IPO, while Far East Hospitality Trust is currently on the road with an offering that could raise up to $578 million, also in Singapore. They are both hotel-focused Reits.
IGB Reit is sponsored by IGB Corporation, which is one of Malaysia’s biggest owners and managers of investment properties by market capitalisation and asset value, with diversified interests worldwide, according to a draft prospectus filed on Monday.
It also says that IGB Reit will have the biggest retail property portfolio of the listed Malaysian Reits, and its large asset base will allow it to raise capital in bigger amounts to fund future acquisitions.
Its initial property portfolio will consist of two major retail malls in Malaysia: Mid Valley Megamall and The Gardens Mall. The malls have a combined net lettable area of more than 2.5 million square feet and are part of Mid Valley City, which is one of the largest mixed-use developments in the country, according to the draft prospectus.
These are mid- to high-end retail malls, where local people go shopping, and not assets that are dependent on tourism, which means IGB Reit has less volatile foot traffic, the source said.
The trust is offering 670 million units and, based on a maximum price of M$1.25 per unit, it is expected to raise M$837.5 million. Of the total size, 469 million units, or 70% of the deal, are offered to institutional and selected investors, while 201 million units, or the remaining 30%, are offered to the Malaysian public and eligible directors and employees.
According to the current timetable, the retail offering will start on August 23 and continue until August 30. The institutional offering will follow from August 28 to September 4, when the pricing is expected. The listing is scheduled for September 19.
The final retail price will be determined after the institutional price is fixed, but the final retail price will not be higher than the retail price of M$1.25 per unit, according to the draft prospectus.
Based on this retail price, IGB Reit has a distribution yield of 5.37% for 2013. Its major comparables are Pavilion Reit, CapitaMalls Malaysia Trust and Sunway Reit. They have a yield of around 5%, according to Bloomberg data.
Upon listing, IGB Reit is expected to have a market capitalisation of M$4.25 billion based on the retail price of M$1.25.
CIMB, Credit Suisse and Hong Leong are the joint global coordinators for the deal.
Malaysia has been a bright spot for IPOs this year. In June, Felda Global Ventures, a Malaysian government-owned agricultural commodities company, raised $3.1 billion from its IPO to become the world’s second-biggest offering this year after Facebook’s $16 billion IPO. Malaysia-based hospital operator IHH Healthcare raised $2 billion last month, becoming the third-biggest offering in the world this year.
