Strong demand despite challenging market could see listing raise up to S$717.6m
SINGAPORE – Despite the challenging market conditions, Far East Organization – Singapore’s largest privately-held developer by assets – is set to raise up to S$717.6 million in the largest initial public offering here this year, after pricing the sale of its hospitality trust at the top of an indicative range.
The developer, founded by the late tycoon Ng Teng Fong and run by one of the richest families here, has priced the sale of Far East Hospitality Trust at S$0.93 per stapled security – representing the top of the indicated S$0.86 to S$0.93 range – ahead of its Aug 27 listing, according to people familiar with the transaction.
“The demand is very, very strong,” said one of the sources, who declined to be named because he was not authorised to speak to the media.
The IPO began order-taking for institutional investors earlier this month. The public offer opens tomorrow.
Far East Hospitality, which owns hotels and serviced residences, drew strong demand from institutional investors attracted by its yield and exposure to Singapore’s buoyant tourism sector. “It’s still a yield play in the market now. People are looking for something stable and anything beyond 5 per cent looks attractive,” said Mr Ong Kian Lin, an analyst at Maybank Kim Eng Securities.
A stapled security allows investors to purchase both a trust and a related company. The Far East Hospitality units comprise a real estate investment trust and a business trust, according to a prospectus filed with the Monetary Authority of Singapore this month.
Far East Hospitality plans to sell 329.4 million stapled securities to institutional and public investors and a total of 376.3 million units to cornerstone investors, such as Aberdeen Asset Management and AIA Group. The offering also has an over-allotment option of 65.9 million units.
Based on the offer price, Far East Hospitality expects its distribution yield this year to be 6 per cent, according to its prospectus. This compares with an average of 5.5 per cent across Singapore real estate investment trusts.
The IPO will be the largest this year in Singapore, where US$785 million has been raised in such sales so far this year compared with US$7 billion in the first seven months of last year, according to data compiled by Bloomberg.
The top-end pricing by Far East Organization comes at a challenging time for equities markets as investor demand for fund raising by companies is on the wane, due to worries about the health of the global economy. The Asia-Pacific region has witnessed a lull in the IPO market in recent months apart from Malaysia, home to the world’s second- and third-largest IPOs this year after Facebook’s US$16 billion (S$20 billion) deal.
Far East Hospitality is expected to register its final prospectus with the Singapore central bank this week, a process that opens the offer for retail investors.
Far East Organization is currently restructuring its hospitality and health-care businesses. The IPO of the trust is part of that, the people familiar with the transaction said.
Far East Hospitality will hold seven hotels and four serviced residences in Singapore in its initial portfolio, including Orchard Parade Hotel, Albert Court Village Hotel and Central Square Village Residences. DBS, Goldman Sachs and HSBC are handling the offering. AGENCIES
Read Full Post »
Asia Pacific Hotels 