RPT-UPDATE 2-Lotte REIT becomes 2nd big Asia IPO to be pulled this week

(Repeats to fix technical glitch)

* Follows cancellation of WH Group IPO in Hong Kong

* Asia IPO issuance has doubled to $15.4 bln so far this

year

By Joyce Lee and Elzio Barreto

SEOUL/HONG KONG, May 2 (Reuters) – Lotte Shopping Co Ltd

said it is postponing an up to $1 billion real

estate investment trust listing in Singapore due to unfavourable

market conditions, the second large IPO to be pulled in Asia

this week.

Volatile equity markets this year have helped undermine

sentiment for some of the region’s less attractive listings, but

Asia-Pacific IPO markets as a whole are still expected to have

an upbeat 2014. Issuance for the year so far has doubled to

$15.4 billion over the same period a year earlier.

“People are just being more tactical,” said Keith Pogson,

managing partner for financial services at consultancy EY in

Hong Kong.

“If we can see sensible valuations, where investors believe

they can get some safety in terms of rewards for taking the IPO

risk in getting involved, I think we will see plenty of deals

flying out the door.”

Lotte Shopping’s postponement follows the cancelling of

Chinese pork giant WH Group Ltd’s Hong Kong IPO, even

after it cut the offer size by two-thirds to up to $1.9 billion.

In addition to market volatility, rich valuations and negative

publicity over executive compensation also helped scupper the

deal.

The operator of South Korea’s largest department store

chain, said it may reconsider an IPO for the REIT if market

conditions improve, but is currently looking at a sale and lease

back deal through a local public real estate fund as an

alternative.

The MSCI Asia ex-Japan stock index has been

on a roller coaster ride for much of the year, losing as much as

7 percent in early February but recovering in March. It is now

up 1.5 percent for year to date.

Among Asian IPO markets, Singapore in particular has

struggled in recent years as most big-ticket listings in Asia

opt for Hong Kong where there is more robust demand from Chinese

and international investors.

REIT listings had been one of the few bright spots for

Singapore though expectations for higher interest rates as the

U.S. Federal Reserve unwinds its massive stimulus programme have

helped temper demand.

“Investors are generally skittish about investing in REIT

IPOs on fears that interest rates are headed higher and growth

opportunities in the market across most property segments are

muted,” Pratik Ray, senior property analyst at HSBC in

Singapore.

For the year to date, some 38 initial public offerings have

been cancelled or withdrawn in the region while 138 deals have

been completed, Thomson Reuters data showed. For the whole of

2013, 75 were cancelled or withdrawn while 407 were completed.

This year the reopening of equity markets in mainland China

after a 14-month hiatus and increased activity in Hong Kong is

set to boost listings in the region, although initial

expectations for a boom in China IPOs are being scaled back

somewhat as regulators have taken a cautious approach to

approvals.

Australia and New Zealand have also had a bump in new

listings, helped in part by the sale of government or state

government assets.

In contrast, IPOs in Singapore have had a slow start, with

just $773.6 million of deals so far this year compared to $2.46

billion over the same period in 2013.

In Thailand, due to political turmoil, volumes have plunged

to $485.9 million for the year to date from $2.18 billion

for the same period last year.

(Additional reporting by Saeed Azhar in Singapore; Editing by
Edwina Gibbs)

RPT-UPDATE 2-Lotte REIT becomes 2nd big Asia IPO to be pulled this week