In this briefing:
- Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
- ECM Weekly (9 February 2019) – Pinduoduo, Homeplus, PNB Metlife, Cal-Comp Tech
- Chalet Hotels Post-IPO – First-Day Traded Volume Pales in Comparison to past Indian IPOs
1. Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
The Homeplus REIT (“Korea Retail Homeplus #1 REIT”), which is expected to be completed by end of March, will be the biggest ever REIT IPO in Korea. The key investment merit of this Homeplus REIT is that it offers a stable dividend yield of about 6-7%. We expect a very strong demand for this Homeplus REIT IPO.
Homeplus is the second largest retailer in Korea, after E Mart Inc (139480 KS). Homeplus REIT will use 51 Homeplus stores (out of total of 141 stores) located throughout Korea as its base assets. Homeplus REIT is expected to raise between 1.5 trillion won and 1.7 trillion won in this IPO, of which the allocation between institutional and retail is set at 80:20. The IPO price range is between 4,530 won to 5,000 won.
Rising interest rates also pose a concern for the company. Of the company’s total long term debt, about 61% are floating rate based so higher interest rates could result in higher interest payments for the company.
Overall, this Homeplus REIT IPO is likely to attract high interests among overseas institutional investors. However, there are some concerns that this deal could have relatively lower local institutions interest. One of the main reasons for this is because many large local institutions including the NPS have already invested in Homeplus as a consortium of MBK Partners. Although there is no public market value of Homeplus right now, many investors believe that the consortium led by MBK Partners overpaid for Homeplus back in 2015. As a result, these local institutions that have already invested stakes in Homeplus are less likely to further invest in the Homeplus REIT IPO.
2. ECM Weekly (9 February 2019) – Pinduoduo, Homeplus, PNB Metlife, Cal-Comp Tech
Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.
There are no new IPO filings in Hong Kong but there is news on the timeline of a few upcoming IPOs.
In Korea, Homeplus will be starting its investor education next Monday to raise about US$1.5bn. Brief details of the deal are already available. The company will be selling 345m primary shares at an indicative range of KRW4,530 – 5,000 per share. We heard that the roadshow kick off on 28th February and will likely list on 29th March.
In India, PNB is targeting to list PNB MetLife between April to September. The estimated IPO size was about US$150 – 300m and its draft prospectus was filed last year.
In the Philippines, Cal-Comp Tech (Philippines) (CCTP PH) is targeting to launch its US$123m IPO towards the end of the third quarter this year based on media reports. We have previously covered the IPO in Cal-Comp Tech (Philippines) Pre-IPO Review – Muted Growth in Core Products.
As for placements, Pinduoduo (PDD US) chose to launch its follow-on offering in the midst of Chinese New Year, raising about US$1bn in fresh capital along with sell-down from existing investors. The placement was priced at US$25 per share, a 17.5% discount from its pre-announcement price of US$30.33 on 5th February and a 5.7% discount to its 7th February close price. Settlement date is on 12th February, greenshoe expires on 10th March and lock-up expires 9th May according to Bloomberg.
Accuracy Rate:
Our overall accuracy rate is 72.1% for IPOs and 63.8% for Placements
(Performance measurement criteria is explained at the end of the note)
No new IPO filings
Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.
News on Upcoming IPOs
- PineBridge-backed Uniparts gets SEBI nod to float IPO
- Cal-Comp Philippines eyes IPO by third quarter
- JERA new president says IPO is an option
- Singapore’s Zalora explores listing to fuel expansion
- S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
- Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year
Smartkarma Community’s this week Analysis on Upcoming IPO
- Koolearn: Losses in Full View
- Koolearn: Marketing Expenses Have Taken Operating Profits Down the Drain
List of pre-IPO Coverage on Smartkarma
3. Chalet Hotels Post-IPO – First-Day Traded Volume Pales in Comparison to past Indian IPOs
Chalet Hotels Limited (CHALET IN) raised US$239m at INR280 per share, the top-end of its IPO price range. We have previously covered the IPO in Chalet Hotels IPO Review – Backed up into a Corner.
In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.
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