CapitaMalls Asia, owner of shopping malls in the region, said it priced shares of its Malaysian unit at the low end of its projected range, raising investor concerns gains may be capped when trading begins.
CapitaMalls Malaysia Trust’s units were offered to institutions at 1 ringgit apiece, while shares were sold to individual investors at 98 sen each, it said. The 852 million ringgit ($369 million) initial public offering, the second- biggest in Malaysia this year, was earlier priced at between 1 ringgit and 1.10 ringgit a share for large investors.

 

“The upside on the capital appreciation potential can be quite limited,” said Scott Lim, chief executive officer of MIDF Amanah Asset Management Bhd. in Kuala Lumpur, which manages the equivalent of US$670 million ($926 million). “Most of the properties inside the REIT are priced at market, they’re already at present market value and they’re not undervalued assets.”

 

The IPO follows the 1.5 billion ringgit raised by Sunway Real Estate Investment Trust in its initial sale last month and underscores rising investor appetite for equities in Malaysia amid an economic rebound from last year’s recession. CapitaMalls Malaysia’s IPO may be surpassed by share sales of two units of state oil and gas company Petroliam Nasional Bhd.

 

Sunway REIT fell on its trading debut today, falling to 87.5 ringgit at the midday break, from its institutional offer price of 90 sen.

 

“It’s ok. These things happen,” Jeffrey Cheah, chairman of its parent company Sunway City Bhd., told reporters in Kuala Lumpur today. “It’s a very difficult market. I don’t look at just today. I look at longer-term.”

 

CapitaMalls Malaysia Trust is scheduled to list on July 16 when JPMorgan Chase & Co. will act as stabilizing manager, the company said in a separate exchange filing today. JPMorgan, CIMB Investment Bank Bhd., and Maybank Investment Bank Bhd. are jointly managing the sale.

 

“It is a good proxy to the Malaysian REIT sector that we believe is due for another round of re-rating,” Joshua Ng, an analyst at RHB Research Institute Sdn. said in a report today. “Its growth prospects are good, underpinned by growing rentals and acquisitions.”

 

Singapore-based CapitaMalls Asia, part of Southeast Asia’s biggest developer CapitaLand Ltd., owns shopping malls in China, India and Singapore. CapitaMalls Malaysia is the owner of the Sungei Wang Mall in Kuala Lumpur, The Mines mall, which is south of the city center, and Gurney Plaza in Penang, according to the company’s prospectus.

 

“We are heartened by the success of the offering,” CapitaMalls Asia Chief Executive Officer Lim Beng Chee said in the statement. “Despite the challenging market conditions, it is priced at one of the tightest yields for a Malaysian REIT initial public offering.”