Lotte Department Store, South Korea’s largest department-store operator by revenue, is considering jumping on the trust-listing bandwagon in Singapore, and could raise at least US$1 billion.
The company is looking to list some of its retail mall assets in the form of a trust in Singapore, people with knowledge of the deal said Monday. The IPO is likely to be in the fourth quarter or early next year, they said.
The company’s spokesman declined to comment on whether it aims to list a trust in Singapore.
Singapore, which is the leader for initial-public-offering volumes in Southeast Asia this year, is a sought-after destination for trust listings because of strong demand from investors in the city. Trusts have accounted for more than 90% of the US$3.8 billion raised in the city so far this year, Dealogic data show, and two trusts are due to start trading on the Singapore Exchange
this week.
Lotte Department Store is operated by Lotte Shopping Co.,
which is an affiliate of South Korean conglomerate Lotte Group, whose business interests range from property to confectionaries to movie theaters.
A person with knowledge of the plans said the assets and exact structure of the deal haven’t been finalized, adding that the listing could take the form of a business trust or a real-estate investment trust.
Although business trusts usually carry higher yields, they are considered to be more risky. For instance, in Singapore 90% of the assets in a REIT must be fully developed and already drawing income. Business trusts, on the other hand, can comprise assets under development.
Singapore-listed REITs currently have yields of between 6% and 7%, sharply higher than an interest rate of 0.25% on Singapore dollar deposits over a 12-month period.
REITS are popular among investors in Singapore. Property developer Overseas Union Enterprise Ltd.,
which is raising US$476 million in an IPO of hospitality assets, is set to start trading Thursday, while a US$438 million trust offering of shopping mall assets by Singapore’s largest publishing company, Singapore Press Holdings Ltd.,
is due to start trading in the city Wednesday.
The deals come after two billion-dollar trust listings in Singapore earlier this year. Mapletree Investments Pte. Ltd., the real-estate arm of Singaporean state investor Temasek Holdings Pte. Ltd., raised US$1.3 billion via a China-focused REIT IPO in March. Two months later, Asian Pay Television Trust,
an investment vehicle for Taiwan’s biggest cable-TV operator, raised US$1.1 billion.
Singapore is host to some 32 REITs with a total market value of US$55 billion, a record since the government first set up a legal framework for REITs in 1999. It is also home to 15 business trusts with a combined market capitalization of US$15 billion.
DBS Bank, Goldman Sachs Group,
Nomura Holdings
and Standard Chartered Bank are advising Lotte on the deal.
—Kanga Kong in Seoul contributed to the article.
Write to P.R. Venkat at venkat.pr@dowjones.com and Prudence Ho at prudence.ho@wsj.com
Korea"s Lotte Department Store Mulls Singapore Trust Listing
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