Cromwell European Real Estate Investment Trust (REIT), Singapore's first REIT with pan-European properties, made a steady trading debut after raising $660 million, underpinning the city-state's status as a hot spot for IPOs in Southeast Asia. Cromwell European REIT's units ended slightly above the initial public offering price on Thursday, mirroring opening day moves of several other REITs, which are bought more for their dividend distributions than for capital appreciation.
With the latest listing, Singapore consolidated its appeal as a global hub for REITs and business trusts which offer alternatives to investors chasing returns in a low-yield global environment. Companies have raised about $3.22 billion via IPOs so far in 2017 on the Singapore Exchange (SGX), the most since 2013, according to Thomson Reuters data. Singapore ranks second after Thailand in terms of amounts raised this year in Southeast Asia.
"There's a lot of liquidity in the market. It's becoming the norm. There's a lot of private wealth looking into equities, even private equity investments and strongly rated assets," said Tan Jeh Wuan, head of capital markets for Singapore at DBS Bank, one of the joint bookrunners for the IPO.
"We have a strong listing pipeline - a mix of REITs, equity deals and some SMEs," he said. A strong year is a shot in the arm for SGX, which has been trying to attract more big-ticket IPOs.
The SGX now has 43 REITs and property trusts listed on it, with a combined market capitalisation of about S$88 billion ($65.30 billion), exchange data shows. The Singapore trusts market has delivered an average yield of 6.4 percent, outperforming the benchmark Straits Times index's 3.7 percent, according to consultancy Deloitte. It sees a steady pipeline and sustained interest in the trusts market.
Cromwell European REIT, sponsored by Australia's Cromwell Property Group, had offered 428.5 million units at 0.55 euros each. Separately, cornerstone investors, which include Hillsboro Capital Ltd and Cerberus Singapore Investor LLC, agreed to subscribe to 581.82 million units. Hillsboro Capital is the private investment holding firm for Philippine billionaire Andrew Tan.
Cromwell European REIT units ended at 0.555 euros. Its portfolio mainly comprises office, light industrial and logistics assets in Europe.
Philip Levinson, CEO of Cromwell EREIT Management, the REIT's manager, said Singapore's deep pool of wealth management capital was one of the key attractions for tthe REIT to list in Singapore DBS Bank, Goldman Sachs, UBS AG, Daiwa Capital Markets and CLSA Singapore are the joint bookrunners and underwriters for the IPO.
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