Tesco's Thai IPO

Tesco’s Thai property fund in pre-marketing for IPO

The UK retailer’s Thai unit aims to raise about $450 million from the offering of a property fund, which will be the country’s biggest IPO in nearly six years.
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One of Tesco's 88 Thai hypermarkets
<div style="text-align: left;"> One of Tesco's 88 Thai hypermarkets </div>

Pre-marketing is underway for an initial public offering of the Tesco Lotus Property Fund, which aims to raise about Bt14 billion ($450 million).

If successful, it will be the biggest IPO in Thailand since Rayong Refinery’s $719 million offering in May 2006, according to Dealogic.

Thai property funds are similar to a real estate investment trust (Reit) and Tesco’s planned IPO will create the biggest retail property fund in Thailand, according to an announcement made by the British supermarket chain in September. It will also be the most geographically diverse, comprising a portfolio of properties in Bangkok, provincial capitals and popular tourist areas.

According to the IPO plan, which Tesco revealed last September, the fund will initially comprise 15 existing high-quality shopping malls, each anchored by a Tesco Lotus hypermarket in prime locations across Thailand, as well as freehold land and ground leases. Tesco Lotus, the leading retailer in Thailand with more than 800 stores, will continue to lease all 15 hypermarkets from the fund.

“By releasing value from our Thai property we will be able to invest in further innovation and growth for our customers and shareholders,” said Laurie McIlwee, Tesco’s chief financial officer, in September.

After the pre-marketing that kicked off on Monday, the roadshow is expected to start during the week of February 20, while the pricing is slated for the week of March 5 and the listing is scheduled for mid-March, according to a source.

Bank of America Merrill Lynch, Nomura, Phatra Securities and Royal Bank of Scotland are leading the deal, the source said.

Elsewhere in Asia, major offerings in the market right now include Canada’s Sunshine Oilsands, which is seeking to raise up to $600 million through its Hong Kong IPO, and China’s Xiwang Special Steel, which is seeking to raise as much as $217 million, also in Hong Kong.

Despite the debt crisis in Europe and worries about the US economy, emerging markets in Asia have shown some resilience. Thailand’s main index is up about 7% so far this year, after losing about 1% in 2011, while Indonesia has gained more than 3% on top of a similar rise in the previous year. Hong Kong is up about 12% to date, but only after losing about 20% in 2011.

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