Dynasty Real Estate Investment Trust, an investor in Chinese property backed by billionaire Li Ka-shing, is seeking as much as 5.4 billion yuan ($851 million) in Singapore’s first dual-currency initial public offering.
Dynasty REIT, which is managed by Singapore-based ARA Asset Management Ltd. (ARA), will have units denominated in both yuan and Singapore dollars, according to a prospectus filed with the Monetary Authority of Singapore yesterday. The company is attempting the city-state’s biggest IPO this year.
Li’s Hui Xian Real Estate Investment Trust (87001), until now the only stock denominated in yuan outside mainland China, has dropped 23 percent since its April 2011 IPO. The yuan fell 2.9 percent against the Singapore dollar in the past year as China’s economy cooled, denting demand for Chinese-currency assets.
“The weaker economic numbers out of China indicate that the yuan may not appreciate that much,” said Lee King Fuei, a Singapore-based fund manager at Schroders Plc. (SDR) “These kind of dual currency structures might make sense for retail investors who have very specific preferences on their currency exposure. For institutions, it might not make any difference.”
Dynasty plans to offer as many as 901.3 million units at 4.40 yuan to 4.70 yuan apiece to the public. Gross proceeds from the offering will be about 5.4 billion yuan, including units sold to ARA and so-called cornerstone investors, the prospectus shows.
Yuan deposits in Hong Kong declined in August to the lowest level since May 2011 as weakened expectations for yuan appreciation offset new rules allowing non-residents to purchase the Chinese currency. Singapore doesn’t publish the size of its yuan deposits.
At $851 million, the IPO will be Singapore’s largest since Li’s Hutchison Port Holdings Trust raised $5.5 billion in March 2011. Singapore has this year ceded its position as Southeast Asia’s foremost IPO fundraising market to Kuala Lumpur, which accounts for three of Asia’s four largest deals in 2012.
Religare Health Trust, backed by the assets of Indian hospital operator Fortis Healthcare Ltd., is raising about $416 million in a Singapore IPO, according to two people with knowledge of the matter.
Dynasty REIT, backed by commercial properties in the Shanghai, Nanjing and Dalian, will invest in commercial real estate properties in China, according to the sales document. Standard Chartered Plc, DBS Group Holdings Ltd. and Macquarie Group Ltd. are managing the offering.
Singapore Exchange Ltd. (SGX) has allowed securities including stocks and exchange-traded funds to be listed in two currencies since April. Hutchison Port Holdings’s IPO was denominated in the U.S. currency, and the shares started trading in both U.S. and Singapore dollars on April 2 of this year.
The bourse said in July it plans to start listing securities denominated in the Chinese currency as it seeks to boost its position as an offshore yuan center.
In Hong Kong, Meilan International Holdings Ltd., a Chinese chemical producer, plans to raise more than $100 million in what may be the city’s first dual-currency IPO, two people familiar with the matter said in August.
Depositors in Singapore hold about 60 billion yuan, the Straits Times newspaper reported in June, citing Ong Chong Tee, deputy managing director at the Monetary Authority of Singapore. Savings in Hong Kong fell 1.9 percent from the previous month to 552 billion yuan, the Hong Kong Monetary Authority said on Sept. 28. That’s down from a record 627 billion yuan at the end of November.
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