By P.R. Venkat
SINGAPORE--Manulife US Real Estate Management Pte. Ltd. said it
will delay a planned US$465 million initial public offering here
due to volatile market conditions, the latest firm to fall victim
to weak investor sentiment.
The company, a unit of Canadian insurer Manulife Financial
Corp., started taking orders from investors last week, but demand
for the real-estate investment trust's units didn't meet the
company's expectations, people with knowledge of the deal said.
"In light of increased volatility in the equity capital market,
the IPO of Manulife US Real Estate Investment Trust has been
delayed. Depending on market conditions, the IPO is expected to
proceed at a later date," the company said in a statement.
Sentiment toward new offerings has been weak, and Asia's
equities markets have turned volatile in the past week due to
uncertainty about economic growth in China and the debt crisis in
Greece. Expectations of a possible rise in interest rates in the
U.S. this year have also been prompting investors to move out of
some Asian markets.
China's Shanghai Composite Index fell 12% last week. Singapore's
main index rose, but has been volatile this year and has fallen
0.7% since January.
Other firms have also suffered. In May, an Indonesian
telecom-tower operator partly owned by Carlyle Group postponed a
planned share sale that could have raised up to US$300 million,
because of weak market conditions. In March, two firms in
Malaysia--a helicopter firm partly owned by KKR and the automotive
arm of Malaysia's Sime Darby Bhd., the world's largest listed
palm-oil producer--also pushed their IPOs to next year, citing
similar reasons, people with knowledge of those deals said
earlier.
Manulife US Real Estate lodged its preliminary IPO prospectus
with the Monetary Authority of Singapore last week, which showed
that the company was seeking to raise 629 million Singapore dollars
in gross proceeds. The IPO, if successful, would have been the
biggest offering in Singapore so far this year. The company was
planning to sell the units at 82 Singapore cents (61 U.S. cents) a
unit and had committed to pay a 6.3% yield for 2016, the prospectus
showed.
It had also secured six cornerstone investors, who had agreed to
take up units of the Singapore REIT ahead of the IPO. Having such
investors helps bankers and the company market the deal to other
institutional and retail investors.
The cornerstone buyers included sovereign-wealth fund Oman
Investment Fund, Nikko Asset Management and Malaysia's Fortress
Capital Asset Management.
Singapore is home to nearly 59 real-estate investment and other
trusts, with a combined market capitalization of close to S$100
billion. Investors are drawn to their yields, which at about 6% or
7% a year exceed the 0.25% offered on 12-month Singapore-dollar
deposits.
Only a few U.S. companies have listed in the region. The most
recent offering was a US$1.3 billion IPO by the luggage maker
Samsonite International SA in Hong Kong in 2011, according to
Dealogic, a data provider.
Singapore's IPO market has been weak this year, partly because
investors have shown more interest in soaring stocks in mainland
China and Hong Kong. Companies have raised US$33 million through
IPOs in Singapore this year, compared with US$619 million a year
earlier, according to Dealogic.
Write to P.R. Venkat at venkat.pr@wsj.com
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