Singapore: A real estate investment trust backed by Hong Kong tycoon Li Ka-shing said on Wednesday it had suspended its planned $800 million (Dh2.94 billion) yuan-denominated IPO in Singapore due to weak global markets.
Dynasty REIT’s initial public offering (IPO), sponsored by real estate fund manager ARA Asset Management, would have been the second yuan-denominated flotation outside mainland China after Hong Kong hosted the first one in 2011.
Dynasty REIT had planned to price its initial shares offer on Wednesday after formally launching it last week, with a listing on the Singapore Exchange scheduled for October 30.
“While Dynasty REIT did receive substantial support from institutional and retail investors... weak global markets continue to impede overall demand, which would likely impair aftermarket performance,” ARA said in a statement.
“After consulting with the underwriting banks, ARA would like to announce that it has suspended Dynasty REIT’s IPO until further notice,” it added.
ARA is an affiliate of the Cheung Kong Group, whose chairman is Li, Hong Kong’s richest man.
But ARA said that since it launched its prospectus with Singapore’s central bank, “there has been a marked change in investor sentiment given the recent aftermarket performance of several IPOs”.
It also cited a “gradual worsening of the overall market conditions” driven largely by weak earnings results by major multinational companies.
Global firms like Google, McDonald’s and IBM have all reported lacklustre earnings, while Caterpillar, the world’s biggest maker of construction and mining equipment, has also cut its sales outlook in a move that reflects slowing world demand.
In its statement, ARA said it may consider a “China-focused REIT at a later date” and that it was maintaining its “positive outlook” on the potential growth of the retail and office sectors in China.
Singapore is aiming to be an alternative to Hong Kong as a trading hub for the fast-growing offshore yuan market.
Offshore trading of the yuan would allow Chinese banks to do more business outside the mainland and also bolster Beijing’s aim to promote its currency as an international unit.
