Manulife Financial Corp., Canada’s largest life insurer, will seek as much as $470 million in its second attempt at a Singapore initial public offering of its U.S. properties as it tries to entice investors with dividend yields higher than some of its peers.
Manulife U.S. REIT, backed by three office buildings in Los Angeles and Atlanta, will offer 566 million units at 82 cents to 83 cents apiece, according to a prospectus filed today with the city-state regulator. The trust will offer a dividend yield of as much as 6.7 percent for this year and 7.2 percent for 2017, the filing said.
The offering will be Singapore’s first initial share sale above $100 million since BHG Retail REIT raised $194 million in November. A successful listing will give a boost to the city-state’s exchange, which had the smallest haul of IPOs among the region’s four largest stock markets in 2015.
“It’s good to launch this IPO now since market sentiment has improved,” Margaret Yang, a strategist at CMC Markets in Singapore, said by phone. “It has been a long time since we’ve seen a big IPO. This will help improve confidence in the Singapore market.”
Manulife U.S. REIT delayed its IPO in July last year citing volatile market conditions. It has previously offered an estimated 6.3 percent dividend yield for 2016.
The trust, which plans to start taking orders as early as Tuesday, will sell about 35 percent of the institutional offering to cornerstone investors, people with knowledge of the matter said, asking not to be identified as the information is private.
Cornerstone investors include private banking clients of Credit Suisse Group AG and DBS Group Holdings Ltd., the prospectus said. DBS Bank Ltd., Malaysia’s Fortress Capital Asset Management, Oman Investment Fund and Lucille Holdings Pte are also cornerstone investors in the offering, the prospectus said.
Higher Yield
Based on the deal terms, the units would trade with a higher dividend yield than some of its peers on the exchange. Keppel REIT will offer an estimated 6.32 percent yield in 2016 and 6.22 percent in 2017, according to analyst forecasts compiled by Bloomberg. CapitaLand Commercial Trust Ltd., meanwhile, is forecast to offer a 6.2 percent yield this year and next, the data show.
“With a benign interest rate environment, we think that the hunt for yield may lift demand for high dividend-yielding stocks,” Wong Hong Wei, analyst at KGI Frasers Securities Pte., said by e-mail Tuesday. “However, the softening USD will be something investors will watch out for in the near term.”
Commitments from cornerstone investors and indicated interest from anchor investors accounts for about 80 percent of the sale, according to the people. Manulife U.S. REIT plans to start trading on May 20, the prospectus said.
DBS, China International Capital Corp., Credit Suisse and Deutsche Bank AG are arranging the sale, according to the filing.
Source: Bloomberg