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Friday, June 25, 2010

Institutional tranche of Sunway REIT IPO 'fully covered'

The institutional segment of the initial public offering (IPO) of Malaysia's largest real estate investment trust (REIT), Sunway REIT, has been "fully covered" at above RM0.90 a unit, two sources with direct knowledge of the deal said.

The roughly US$500 million (RM1,610) IPO, Malaysia's largest so far this year, comes amid a faltering market for new offerings as investors fret about further financial troubles in Europe and its impact on the global economic recovery.

The IPO also comes ahead of a host of offerings by national oil corporation Petronas and shipping firm MISC scheduled for the second half of 2010.

"The book is fully covered. It's oversubscribed by about 1.2 times now," said one of the sources, who asked not to be named because he is not authorised to speak to the media.
"All the local funds are in and we're still getting international orders. It's quite an achievement given the current market conditions," the source said.

But Sunway REIT may have to price its IPO at the lower end of its indicated range because of deteriorating market conditions, said the sources.

The company last week set the indicative price range for the sale of 1.6 billion units of the REIT at between RM0.90 and RM0.98 per unit.

This means the IPO could raise between RM1.44 billion to RM1.57 billion.

The global market for IPOs, which had shown signs of a resurgence early in the year, faces a spate of delays and downsizings, underscoring difficulties for mega deals such as Agricultural Bank of China's IPO.

Sunway said earlier this month it had secured four cornerstone investors who will take 14 per cent of the IPO.

Sunway REIT will have a market capitalisation of RM2.4 billion to RM2.6 billion when it is listed on July 8.

By Reuters

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