CHINESE retailer Beijing Hualian Group (BHG) is looking to list its malls in a Singapore real estate investment trust (Reit) worth S$597 million.
It is looking to place out 150.1 million units under the placement tranche and public offer at S$0.80 per unit. This values the initial public offering at S$120 million.
If successful, this would be Singapore's first mainboard listing this year - though whether it comes to fruition remains a question mark, especially after weak demand led Manulife to postpone its own office Reit indefinitely in July.
The sponsor is Beijing Hualian Department Store Co, which is listed on the Shenzhen Stock Exchange with a market capitalisation of 13 billion yuan (S$2.9 billion). It has 43 operating malls and malls under development in China.
Notably, the strategic investor, a Singapore-incorporated subsidiary of BHG and which has agreed to a 30.1 per cent stake in the Reit, has said it will not receive distributions for its units until 2020 "to demonstrate its support for BHG Retail Reit and its commitment to the long-term growth and development of BHG Retail Reit".
With this undertaking, the distribution yield will increase from 4-4.5 per cent to 5.7-6.3 per cent.
BHG, including its subsidiaries, has agreed to subscribe for up to 172.9 million units, representing 35.1 per cent stake if the over-allotment option is not exercised.
The cornerstone investors has also agreed to subscribe for 169.7 million units, representing a 34.4 per cent stake. The cornerstone investors are China Hi-Tech Holding Company; China Life Insurance; China Merchants Bank Asset Management; and Chanchai Ruayrungruang, board chairman of Reignwood Group and Red Bull Group China.
The funds raised will help the Reit to acquire the five malls from the sponsor that would make up its initial portfolio.
If all goes well, the public offer will open on Dec 2 at 6pm, and close on Dec 7 at 12 noon. Trading will then begin on Dec 11 at 2pm.