August 28, 2012 / 6:21 AM / in 5 years

Malaysia IGB Reit sets tight pricing for institutional part of $266 mln IPO

KUALA LUMPUR, Aug 28 (Reuters) - Malaysia’s IGB Real Estate Investment Trust has set a tight price range for the institutional tranche of its up to $266 million IPO, according to a term sheet seen by Reuters on Tuesday, indicating confidence in demand for the offer.

The IPO, potentially the fourth largest in the Southeast Asian country this year, will be offered to institutions at a price range of 1.15 ringgit-1.25 ringgit per unit, the term sheet showed. IGB Reit launched its retail offer on Monday, at a maximum price of 1.25 ringgit per unit.

A wide indicative price range for an IPO would show that the sponsors are testing the strength of demand for the offering, while a narrow range shows they are reasonably certain about the take-up.

The unit of Malaysian property firm IGB Corp Bhd is offering up to 670 million units in the IPO, comprising 469 million units for sale to institutional investors and another 201 million to employees and the public. Listing is set for Sept. 21.

The bookbuilding range translates to a forecast 2013 yield of 5.4 percent to 5.8 percent, according to the term sheet. The book opens on Tuesday and closes no later than Sept 6.

Based on the top end of the IPO price, IGB Reit would have a post-IPO market capitalisation of 4.25 billion ringgit ($1.37 billion), the largest in Malaysia ahead of Pavilion Real Estate Investment Trust’s 4.05 billion ringgit.

The property trust, which owns two Kuala Lumpur shopping malls -- the Mid Valley Megamall and the Gardens Mall -- expects to use the IPO proceeds for future expansion.

It has hired CIMB Investment Bank and Hong Leong Investment Bank as the principal advisers and joint managing underwriters for the IPO.

CIMB, Credit Suisse and Hong Leong are the joint global coordinators, while CIMB, Citigroup, Credit Suisse, DBS, Deutsche Bank, Goldman Sachs, Hong Leong, HSBC, JP Morgan and Maybank are the joint book runners. Joint underwriters are AmInvestment, CIMB, Hong Leong and Maybank. ($1 = 3.1095 Malaysian ringgits) (Reporting By Yantoultra Ngui; Editing by Muralikumar Anantharaman)

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