ASEAN KEY DESTINATIONS
Frasers Logistics rises in debut after Singapore’s largest IPO since 2013
SINGAPORE: Frasers Logistics and Industrial Trust (FLT) got off to an upbeat start on the Singapore Exchange (SGX) on Tuesday (Jun 21), marking the country's biggest new listing in three years.
The real estate investment trust (REIT) opened at S$0.905 in its trading debut, up from its offering price of S$0.89 which was the top of the indicative range. As of 10.25 am, the counter rose up to S$0.910 on a turnover of 66.3 million units.
The debut follows an initial public offering (IPO) which raised about S$903 million, the largest listing in Singapore since 2013 when Asian Pay Television Trust raised about S$1.9 billion.
A combination of favourable fundamentals and an ebbing of fears surrounding Britain’s coming vote on its membership in the European Union (EU) this week helped the REIT in its debut, analysts told Channel NewsAsia.
According to CMC Markets’ analyst Margaret Yang, FLT has a “well-diversified” portfolio of 51 industrial properties in Australia, with a total value of almost S$1.6 billion. Meanwhile, the bottoming-out of the commodity cycle and previous hefty declines in the Aussie dollar indicate the likelihood of further upside in the Australian currency, which means higher returns for investors, she added.
In addition, the debut came at a “good timing” amid a retreat in risk-off sentiment after a series of opinion polls ahead of Thursday's EU referendum showed the “Remain” camp recovering some momentum. The implied probability of a British vote to remain in the bloc rose to 72 per cent on Monday, up from a range between 60 and 67 per cent on Friday, according to Betfair's betting odds.
“It’s a good timing to debut. The latest poll results have alleviated worries about a ‘Brexit’ so sentiment has improved with the Straits Times index rallying 1.3 per cent yesterday,” said Ms Yang. “ It’s not a surprise that the REIT has opened higher.”
FLT - touted as the largest initial pure-play Australian logistics and industrial REIT to be listed on the SGX - issued a total of 521.7 million units, including an international placement of 441.7 million units and a public tranche of 80 million units to the Singapore public.
In a filing with the SGX last Friday, it said that the placement tranche has been more than six times subscribed by institutional investors, amounting to more than S$2.5 billion, while the public tranche attracted S$276 million in applications, translating to a subscription rate of 3.9 times.
Separately, a total of 15 cornerstone investors, including BlackRock Funds, DBS and Morgan Stanley, have subscribed to 492.9 million units, or about 48.6 per cent of the total number of units in issue after the listing.
Based on the IPO price, the REIT offers a distribution yield of 6.8 per cent for the forecast period of four months to Sep 30, and 7.3 per cent for the financial year ending Sep 30, 2017, according to the prospectus.
The REIT's IPO, sponsored by real estate developer Frasers Centrepoint, came on the back of Manulife US REIT's US$519.2 million share sale last month. The latter saw an uninspiring debut on May 20 amid concerns over when the US Federal Reserve would raise interest rates for the second time.
FLT’s relatively upbeat performance will come as a much-needed boost for the local market following a recent trend among homegrown firms such as Osim International making a beeline for privatisation and a tepid 2015 which saw the Republic’s exchange rake in US$432.6 million worth of deals – its weakest year for listings in 17 years.
“It is definitely a boost,” said IG’s market strategist Bernard Aw. “The longer you go without a mainboard listing, the more investors will be disappointed with the state of the local market so it’s always good to have a pipeline of new stocks to (maintain) interest in the market.”
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