REIT fund seeks Rs403m investment via IPO

Will offer 22.94m units for sale in current week at PSX

KARACHI:

TPL Real Estate Investment Trust (REIT) Fund-I is scheduled to offer a minimum of 1.25% (22.94 million) units at Rs17.59 per unit to the general public with the aim of raising Rs403 million in the ongoing week at the Pakistan Stock Exchange (PSX).

Fund runners may opt for selling an additional 1.22% (22.39 million) units through unlocking a green shoe option, taking total fund raising to a maximum of Rs797 million through the two-day initial public offering (IPO).

In brief comments on the offer for sale, Topline Research said TPL REIT Management Company Limited (TPL RMC), a 100% subsidiary of TPL Properties, had launched “Pakistan’s first and largest hybrid Shariah-compliant REIT namely TPL REIT Fund-I.”

REIT Fund-I has invested in three projects including Mangrove, One Hoshang and Technology Park.

Currently, unit holders of the REIT scheme consist of TPL Properties and eight commercial banks. The initial REIT size is Rs18.35 billion. Of this, 61% is held by anchor investors and 39% by TPL Properties. TPL Properties is a strategic investor and the eight commercial banks are anchor investors.

The strategic investor made a non-cash contribution of real estate assets to the scheme valuing at Rs7.1 billion while the anchor investors made a collective cash equity contribution of Rs11.25 billion. The price of units on sale at Rs17.59 per unit is equivalent to the net asset value (NAV) of the REIT.

The NAV on account of continuing progress on the three projects of TPL REIT will be quarterly disseminated through the PSX, providing potential investors with periodic updates and giving impetus to the listed unit price. A quoted price will be beneficial to all investor portfolios that are “marked to market”.

The research house said the purpose of the sale offer was to comply with REIT regulations, attract foreign investment and discover the unit price.

It elaborated that the offer was being made to ensure compliance with Regulation 7 of REIT that requires REIT schemes to get listed within a maximum of three years from the date of transfer of real estate or financial close, whichever is later. Financial close of the fund was declared on June 24, 2022.

The listing will help the scheme to accommodate the interest of foreign investors. Company prospectus says TPL RMC has been receiving queries from multiple foreign investors about participation in the scheme.

This will be the third IPO and listing at the PSX in the ongoing calendar year, as companies return to the bourse to raise equity after the restoration of political and economic stability in the country.

The stability is reflected in the skyrocketing benchmark KSE-100 index at the PSX. It has briefly crossed 73,000 points this week compared to 40,000 points in June 2023. Earlier, Secure Logistics Group successfully raised Rs600 million through the sale of 50 million shares at Rs12 per share in late March 2024.

Also, International Packaging Films aims to secure a minimum investment of Rs1.47 billion through putting its 70.1 million shares on sale at a price beginning from Rs21 per share at an auction to be held next week.

Published in The Express Tribune, May 2^nd, 2024.

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