ARA Asset Management, the manager of property trusts backed by billionaire Li Ka-shing, canceled what would have been Singapore’s first dual-currency initial public offering amid sluggish demand for new equity.
ARA suspended the IPO of Dynasty Real Estate Investment Trust, which is backed by commercial real estate in China and was set to trade in both yuan and Singapore dollars, according to a stock exchange statement today.
Recent IPOs in Southeast Asia including Religare Health Trust and Astro Malaysia Holdings have fallen since they started trading, dimming the allure of new equity. Li’s Hui Xian Real Investment trust, which last year completed the first yuan IPO outside China, is down 22% from its offer price.
“There has been a marked change in investor sentiment given the recent after market performance of several IPOs and a gradual worsening of the overall market conditions,” ARA said in the statement.
At up to 5.4 billion yuan ($1.05 billion), Dynasty REIT’s IPO would have been Singapore’s largest since Li’s Hutchison Port Holdings Trust raised US$5.5 billion in March last year. ARA said today it may consider a China-focused REIT later, and will continue to manage the properties in its private funds. Dynasty REIT is backed by commercial properties in Shanghai, Nanjing and Dalian, according to the IPO prospectus.
Singapore’s surging dollar may also have hurt the appeal of a yuan-denominated offering. The city-state’s currency has gained 5.9% against the U.S. dollar this year, the second-best performance among major currencies, data compiled by Bloomberg show.
IPO DROUGHT
IPOs have dwindled in Singapore and Hong Kong as turbulent global markets and Europe’s credit crisis weakened investor appetite for risk. In July, Reliance Communications. withdrew a US$1 billion ($1.22 billion) IPO of its undersea cable unit in Singapore, citing market conditions.
Seven of this year’s 10 biggest first-time offerings in Hong Kong have been priced at the low end of price ranges marketed to investors, data compiled by Bloomberg show.
ARA shares fell 1.3% to close at US$1.555 today in Singapore trading. The stock has risen 27% this year, outperforming the 15% gain in the benchmark Straits Times Index.
Standard Chartered Plc, DBS Group Holdings and Macquarie Group were managing the IPO.
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