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Update: Stabilisation action steadies BHG Reit's price on debut day
STABILISING action saved the day. Units of BHG Retail Reit traded between a narrow range of S$0.80 and S$0.805 during its three-hour session on its first trading day, which started at 2pm.
The Chinese mall owner eventually ended unchanged at its initial public offering (IPO) price of S$0.80. Some 23.8 million units changed hands, making it the fourth most active counter on the stock market.
This is the only successful Singapore Exchange (SGX) Mainboard listing this year.
After markets had closed, the stabilising manager, DBS Bank, also the underwriter for the IPO, disclosed that it had bought about 1.2 million units in the Reit at S$0.80 each.
Earlier when the offer was open, there had been market watchers who found the IPO price of S$0.80 too high and expected the market to value it lower when the Reit started trading.
The stabilisation action can only be exercised within 30 days of the listing date, and has a cap. DBS can only buy a maximum of about 24.6 million units (representing 16.3 per cent of the total number of units) to maintain the Reit's trading price in the open market.
DBS Bank had earlier decided to exercise its entire over-allotment option and issue the extra 24.6 million units to placement tranche investors. These over-allotment units were borrowed from a unit of the Reit sponsor, Beijing Hualian Department Store Co.
Underwriters can boost the price by buying up units when they trade below the offer price. They then return the units to the lender.
In all, the Reit had raised about S$120.9 million from the IPO, plus another S$273.2 million from extra units subscribed to by the Reit sponsor, some cornerstone investors and a unit of Beijing Hualian Group. This brings the total funds raised to about S$394 million.