BHG Retail Reit "fully subscribed" and IPO will proceed

THE initial public offering (IPO) of Chinese mall owner has been "fully" subscribed and the IPO will proceed at S$0.80 per unit, the trust manager said in Singapore Exchange filings late on Wednesday night.

This means it has raised about S$120.94 million from the IPO. It also raised an extra S$273.24 million from units subscribed to by the Reit sponsor Beijing Hualian Department Store Co; some cornerstone investors; and a unit of Beijing Hualian Group.

About 143.17 million units were offered in the placement tranche. The trust manager did not say how many times subscribed the placement tranche was.

For the retail tranche, 8 million units were offered and investors applied for only 8.48 million.

The underwriter of the offering has had to exercise its over-allotment option and issue an extra 24.63 million units, which have been allocated to placement tranche applicants.

"The support from the international investing community and local investors in Singapore for our IPO is heartening," said trust manager chief executive officer Chan Iz-Lynn in a press release sent out close to 11pm on Wednesday. "This reflects the confidence in BHG Retail Reit's investment proposition."

BHG Retail Reit uses a sponsor waiver, a kind of financial engineering, to artificially inflate the yield, and market commentators have raised concerns over whether the yield may tumble once that support is removed.

Analysts have also said that the IPO price of S$0.80 is too expensive.