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Pavilion REIT to raise RM710m from IPO

KUALA LUMPUR (Nov 24): Pavilion Real Estate Investment Trust (Pavilion REIT) is set to raise RM710.3 million from the sale of 26.33% of its total issued units at its initial public offering (IPO), with prices fixed at 90 sen apiece for institutions and at 88 sen for retail investors on Wednesday.

Cornerstone investors will also be paying 90 sen apiece, CIMB Investment Bank said in a statement to Bursa Malaysia, issued on the company's behalf on Wednesday. Yield for Pavilion REIT, slated to debut on Dec 7, is forecast at 6.41% for FY11 and 6.51% for FY12, based on the retail price of 88 sen.

The listing is Malaysia's fourth biggest this year, trailing Bumi Armada Bhd, UOA Development Bhd and MSM Malaysia Bhd.

Only 35 million or 4.43% of the 790 million units sold at IPO had been set aside for retail investors, including four million units for eligible employees and tenants.

"Total demand in the institutional book (excluding allocation for cornerstone investors) was approximately 28 times the number of units made available for subscription. The retail offering was also very well-received, with subscription rate for the public ballot portion of approximately 7.5 times," said the manager Pavilion REIT Management Sdn Bhd in a statement on Wednesday.

Six cornerstone investors, including the Employees Provident Fund Board and Kumpulan Wang Persaraan, are taking up 265 million shares or 8.83% of the enlarged base. The other cornerstone investors are Great Eastern Life, American International Assurance Bhd, Permodalan Nasional Bhd and HwangDBS Investment Management Bhd. Other local and foreign institutions were allocated 490 million units, subject to book-building, according to its IPO prospectus.

Malton Bhd's chairman Datuk Lim Siew Choon and his spouse Datin Cindy Tan Kewi Yong will collectively own 37.6% of Pavilion REIT post-listing, while Qatar Investment Authority will hold 36.1%.

Pavilion REIT — whose portfolio consists of the Pavilion Kuala Lumpur Mall and the 20-storey Pavilion Tower office block — plans to pay out at least 90% of its distributable income on a half-yearly basis from FY12. It will distribute 100% of its income from the period from its debut to Dec 31, 2012, its IPO prospectus read.

CIMB Investment Bank, Maybank Investment Bank Bhd, Credit Suisse Group and Deutsche Bank Bhd are joint bookrunners for the IPO, while QNB Capital is listed among global managers for the flotation.

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