EC World hopes to raise US$260m in Singapore REIT listing
EC World Real Estate Investment Trust (REIT) – sponsored by Forchn Holdings Group – plans to price its initial public offering (IPO) at about US$260 million in the Singapore Exchange (SGX), according to Thomson Reuters publication IFR.
The REIT, which was launched on the Mainboard on Wednesday, was backed by a portfolio of six properties strategically located in Hangzhou, China with combined valuation of over 6.36 billion yuan.
Hangzhou, which is largely regarded as China’s biggest e-commerce hub, currently houses Chinese giants including Alibaba Group, Baidu, Jungdong and Tencent.
Mr. Peter Lai, Chief Executive Officer of the Manager said, “EC World REIT also plans to explore opportunities to leverage on the cyclical opportunity in China’s real estate market to acquire attractive industrial properties and convert them into e-commerce logistics properties. Moving beyond China, the Manager will also actively seek opportunities to acquire e-commerce assets in Singapore and other countries in Southeast Asia to complement EC World’s assets in China and further diversify its e-commerce portfolio. This dovetails with the “One Belt One Road” initiative advocated by the PRC government.”
The REIT will be selling 188.1 million units at S$0.81 a piece which is near the top end of their indicative range of S$0.76-S$0.82. A total of $629.8 million in gross proceeds which includes $283.4 million from its sponsor and $194 million from cornerstone investors was raised.
Forchn Holdings Group will retain a 45 per cent stake and 30.8 per cent will be collectively held by cornerstone investors, BOCOM International Global Investment Limited, Bosun International Holdings Ltd, and Sunkits Resources Limited, an indirect wholly-owned subsidiary of China Cinda Asset Management Co., Ltd.
EC World will be Singapore’s third main board REIT listing and the first Chinese Specialised Logistics and E-Commerice Logistics REIT to be listed on SGX.
Mr. Zhang Guobiao, Chairman of the Sponsor and Chairman and Non-Executive Director of the Manager said, “We are delighted with the strong support which EC World REIT has received from its cornerstone investors.”
The expected annualised distribution yield in the Forecast Period 2016 will be 7.1 per cent while that of the Projection Year 2017 will stand at 7.3 per cent.
According to the Straits Times, Religare Capital Markets has issued a “do not participate” call on the IPO and warned that “downside risks to owning the Reit are high and the low yield does not compensate for these risks.”
The Singapore Exchange (SGX) has faced a recent dearth of initial public offerings (IPOs). According to a Reuters report funds raised through IPOs and reverse takeovers on the SGX’s main board totalled S$276 million in 2015, compared with S$3.18 billion the previous year.
Last year, there was only one IPO on the SGX main board. In 2015, another China-linked REIT, BHG Retail REIT, went public and raised almost S$395 million in its IPO.
The offer will close at 12pm on July 26, with units to commence trading at 2pm on July 28.