Pavillion – BT Singapore

Pavilion Reit raising RM710m in IPO

(KUALA LUMPUR) Pavilion Real Estate Investment Trust, a Malaysian shopping mall trust part-owned by Qatar Investment Authority, is raising RM710 million (S$291 million) in an initial public offering, two people with knowledge of the matter said.

The company plans to sell units at 90 sen apiece to institutions and at 88 sen to retail investors, said the people, who asked not to be identified as pricing details are private.

Pavilion Reit had marketed the units at 88 sen to 90 sen. Demand exceeded supply by more than 26 times, one of the people said.

The IPO will be the South-east Asian nation’s fourth biggest this year, after share sales by Bumi Armada, UOA Development and MSM Malaysia. Investor demand for shares exceeded supply by more than 40 times for Bumi Armada and MSM’s offerings.

‘It’s probably due to the scarcity factor for big, good-quality IPOs and an appetite for new stock in Malaysia, which seems to be a defensive market,’ said Christopher Wong, a Singapore-based senior investment manager at Aberdeen Asset Management Asia Ltd, which oversees more than US$90 billion of regional equities.

Kuala Lumpur-based Pavilion Reit, which is expected to list next month, has a distribution yield forecast of as much as 6.73 per cent based on the fiscal 2012 earnings estimate, according to a note to investors.

The company owns the Pavilion mall and an adjacent office tower in the capital’s Bukit Bintang area, which Malaysia is developing to rival Singapore’s Orchard Road.

The mall, with a gross floor area of 2.2 million square feet, has an appraised value of RM3.4 billion as of June 1, according to its prospectus, and houses luxury retailers including Bulgari SpA and Prada SpA. — Bloomberg