Manulife seeks to raise $700m in second IPO attempt

Manulife US Reit, which delayed its IPO in July last year because of volatile market conditions, will offer 396.6 million units to institutional and retail investors at 82 US cents to 83 US cents apiece. It plans to start trading on May 20.
Manulife US Reit, which delayed its IPO in July last year because of volatile market conditions, will offer 396.6 million units to institutional and retail investors at 82 US cents to 83 US cents apiece. It plans to start trading on May 20.PHOTO: CDL

Canada insurer touts Manulife US Reit as first pure-play US office Reit to be listed in Asia

The moribund Singapore initial public offering (IPO) market is finally seeing some signs of life.

Manulife Financial Corp, Canada's largest life insurer, is seeking to raise gross proceeds of US$519.2 million (S$700 million) in a second bid at a Singapore IPO of its United States properties.

If successful, this mainboard listing, tentatively scheduled to launch on May 12, would give a much-needed boost to the Singapore Exchange, whose haul of new share sales has been shrinking as rival regional bourses step up their game.

Separately, Catalist-listed tech firm DeClout has been granted conditional eligibility by the Singapore Exchange to list its subsidiary Procurri on the mainboard.

Touted as the first pure-play US office Reit to be listed in Asia, Manulife US Reit will offer 396.6 million units to institutional and retail investors at 82 US cents to 83 US cents apiece. Manulife US Reit plans to start trading on May 20.

Backed by three office buildings - in Los Angeles, Orange County, California, and Midtown, Atlanta - the trust will offer a dividend yield of as much as 6.7 per cent for this year and 7.2 per cent for next year, based on the minimum offer price of 82 US cents. The minimum initial subscription is for 1,000 units.

SIGN OF LIQUIDITY

If this is a successful float, it would signal there's liquidity and the market is positive enough to take up the units. That could entice others to follow.

MR MANO SABNANI, veteran investor, on Manulife US Reit.

The offering, which aims to raise gross proceeds of between US$512.9 million and US$519.2 million, will be Singapore's first IPO above US$100 million since BHG Retail Reit raised US$194 million in November.

Manulife US Reit delayed its IPO in July last year because of volatile market conditions.

"If this is a successful float, it would signal there's liquidity and the market is positive enough to take up the units. That could entice others to follow," veteran investor Mano Sabnani said.

Foreign investments into the US commercial real estate sector have historically been driven by Canadian and European investors. But in recent years, Asian investors have become the largest investors in US commercial property, accounting for 34.1 per cent of the total foreign investment in the sector last year.

Proceeds will be used to buy the three properties, for working capital and payment of costs incurred for the offering and debt financing.

Cornerstone investors, including private banking clients of Credit Suisse Group and DBS Group Holdings, will take up 169.5 million units. DBS Bank, Malaysia's Fortress Capital Asset Management, Oman Investment Fund and Lucille Holdings are cornerstone investors.

Manulife Financial, the holding company of the Reit's sponsor, will also take up 59.4 million units.

Commitments from cornerstone investors will account for about 27.1 per cent of the total number of units issued, while those from retail and institutional investors will account for 63.4 per cent. DBS Bank, China International Capital Corp, Credit Suisse and Deutsche Bank are arranging the sale.

A version of this article appeared in the print edition of The Straits Times on May 04, 2016, with the headline 'Manulife seeks to raise $700m in second IPO attempt'. Print Edition | Subscribe