Canadian insurer, Manulife Financial Corporation (USA) (NYSE:MFC)‘s asset management division will be accepting orders this week for an initial public offering in Singapore of American office properties, as per people privy to the process. The company which is Canada’s biggest life insurer is approaching investors as it tries to raise S$569 million ($421 million) in the largest Singapore Initial Public Offering (IPO) in nearly a year.
Manulife U.S. REIT (Real Estate Investment Trust) is targeting to sell 694.4 million units at a fixed price of 82 Singapore cents per unit. The company will offer around 6.3% dividend yield for 2016 in the offering. Manulife’s IPO is aimed at Asian investors looking at stable cash flow and higher yields than which exists in the bond market.
Manulife’s offering would be presented as a real estate investment and give exposure to the American property market. Singapore hosts almost 59 real estate investment and other trusts with a cumulative market capitalization of nearly S$100 billion. Investors are attracted to their yields of six or seven percent per year that is much higher than the 0.25 percent rate given on annual Singapore-dollar deposits.
According to sources familiar with the deal, Manulife has confirmed six cornerstone investors who would buy as much as 30% of the total deal size. Among the cornerstone, investors are Oman Investment Fund, Fortress Capital Asset Management, and Nikko Asset Management Asia Ltd.
REITs and business trusts were the main fundraisers in Singapore’s IPO market in the last year, as per data from Bloomberg. The REIT will be supported by three office properties in Washington D.C., Orange County, California, and Los Angeles. The offer is being managed by DBS Group Holdings Ltd and JPMorgan Chase & Co. (NYSE:JPM).
According to Manulife Asset Management’s website, it has a dedicated real estate investing team handling a portfolio of office, industrial, residential and retail assets in Canada, America, and Asia. In line with its global peers, Manulife is focused on Asia as the target of its international growth strategy. It’s present in 12 Asian markets including China and Japan as part of its effort to leverage the region’s growing middle class.