Year's first mainboard IPO launched

This year's first initial public offering on the Singapore Exchange mainboard was launched last night.

BHG Retail Reit, which focuses on China retail assets, aims to raise $394.18 million with 151.169 million units priced at 80 cents apiece. This includes up to 143 million units by way of placement and about eight million for the public offer.

It marks the first Reit listing since December last year. The proceeds will go towards repaying debt and working capital, among other uses.

While its yields may be on the low side, its manager said its strong growth story makes up for this.

Ms Chan Iz-Lynn, chief executive of BHG Retail Trust Management, said that while there could be products with better yields, not all may have assets in the pipeline.

BHG Retail has a projected yield of 6.3 per cent for the year.

Mapletree Greater China Commercial Trust had an annualised yield of 7.7 per cent based on its latest results, and CapitaLand Retail China Trust's yield was 7.0 per cent.

"We are starting off with five properties in our portfolio. Looking forward, we have 12 properties with right of first refusal, " said Ms Chan. These properties could be injected into the Reit using a mix of debt and equity, she said, adding that the firm's expected gearing ratio is about 33.5 per cent.

She said the Reit is "very focused on community malls and this is the rising trend in China with a growing middle class". Also, it is "part of an integrated retail group and we are sensitive to the retail scene".

Beijing Hualian Group (BHG) consists of Reit sponsor Beijing Hualian Department Store Co, which is listed in Shenzhen and owns or operates 43 malls in China, and Shanghai-listed Beijing Hualian Hypermarket, which has around 150 supermarkets in China.

BHG also owns a luxury department store in Beijing and has international retail partnerships, including a 50-50 joint venture with Costa Coffee covering North China.

Ms Chan said because two of the Reit's malls - in Hefei and Chengdu - are quite new and not yet at optimal performance, the strategic investor, a BHG subsidiary, has undertaken to waive its distribution rights over the next few years.

The shares are targeted to start trading on Dec 11.

A version of this article appeared in the print edition of The Straits Times on December 03, 2015, with the headline 'Year's first mainboard IPO launched'. Print Edition | Subscribe