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IGB REIT Surges in Trading Debut: Kuala Lumpur Mover

IGB Real Estate Investment Trust, owner of two of Kuala Lumpur’s largest shopping malls, advanced in its trading debut, overtaking Pavilion Real Estate Investment Trust to become Malaysia’s biggest REIT by market value.

The stock rose 11 percent to 1.39 ringgit at the close in Kuala Lumpur from its initial public offering price of 1.25 ringgit per share. This boosted its market value to 4.7 billion ringgit ($1.5 billion), compared with 4.1 billion ringgit at Pavilion REIT, another shopping mall owner.

IGB REIT, an arm of Malaysian property developer IGB Corp., has “plenty of opportunities for growth,” Alia Arwina Izyani Azani, an analyst at RHB Capital Bhd., wrote in a report today, initiating the coverage with an outperform call and a so-called fair value of 1.43 ringgit. This means RHB expects its return to exceed the benchmark FTSE Bursa Malaysia KLCI Index by more than 5 percentage points over the next six to 12 months.

Palm-oil producer Felda Global Ventures Holdings Bhd. jumped as much as 20 percent on its June debut in Kuala Lumpur after raising $3.3 billion in the world’s second-largest initial share sale this year. Hospital operator IHH Healthcare Bhd. gained as much as 14 percent on its first day of trading in July after raising $2 billion.

IGB REIT was today’s most active stock on the Kuala Lumpur stock exchange with 236 million shares traded. The FTSE Bursa Malaysia KLCI Index fell 0.1 percent. The trust raised 837.5 million ringgit in its share sale after pricing units at the top of its marketed range.

Profit Forecast

The trust owns the Gardens Mall and Mid Valley Megamall in Kuala Lumpur, which it acquired from IGB Corp. subsidiary KrisAssets Holdings Bhd. It will generate distributable income of 108.7 million ringgit this year, rising to 230.5 million ringgit in 2013, according to its listing prospectus.

IGB REIT expects to include Southkey Megamall, which is being developed by IGB Corp. in the southern state of Johor, into its portfolio by late 2015, the Star reported on its website today, citing IGB REIT Management Sdn. Chief Executive Officer Antony Barragry.

“Overall, we are positive on IGB REIT due to its well-known assets, the significant growth prospects for the Gardens Mall, and its strong management team,” RHB’s Alia said.

Astro Malaysia Holdings Bhd., the country’s largest pay-TV broadcaster, is joining a resurgence in IPOs in Kuala Lumpur where the benchmark index rose to a record earlier this month. It’s seeking to raise as much as 4.6 billion ringgit, three people with knowledge of the matter said Sept. 19.

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