Frasers Property plans to raise $1.28 billion via a rights issue, so that it can have more resources to invest in industrial and logistics assets, as well as to reduce its gearing.

The company plans to raise the funds by issuing up to issue 1.086 billion new ordinary shares at $1.18, adding to the existing share base of 2.93 billion shares. At $1.18, it is a slight discount of 4.8% off the last traded price of $1.24 on Feb 10. 

For each 100 existing shares held by shareholders now, they are entitled to take up 37 rights shares.

The company’s two controlling shareholders, TCC Assets and Thai Beverage Public Company, which have a combined stake of 86.63%, have both given their irrevocable undertaking to subscribe for their share of the rights. The two entities are both controlled by Thailand’s Sirivadhanabhakdi family, which is in the midst of actively managing its assets and capital.

Thai Bev, already listed in Singapore, is poised to spin-off its beer subsidiary for its own multi-billion separate listing. 

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Frasers Property in its announcement, says that prevailing macroeconomic, social and geopolitical uncertainties have led to added challenges to business whilst concurrently giving rise to new opportunities and trends.

SEE: CGS-CIMB bullish on Frasers Property Limited despite Covid-19 hospitality headwinds

“As a multi-national real estate company developing, owning and operating across geographies and property sectors, understanding the trends and forces that are shaping the markets the group is operating in and the industry, matters,” the company says.

“The Covid-19 pandemic has accelerated some of these trends, specifically in the areas of e-commerce adoption, the drive to build supply chain resiliency, as well as the reimagining of spaces to allow for flexible, multiple use of spaces,” the company adds.

The company describes industrial and logistics assets, and business parks, as its core asset class. As at Sept 30 2020, it controls some $8.4 billion worth of such assets – including those in its separately listed Frasers Logistics and Commercial Trust. 

Frasers Property plans to allocate some $700 million to acquire, and or develop industrial, logistics and business park assets. 

Another $250 million is set aside for setting up private funds or joint ventures or similar arrangements to invest in property assets, including commercial and ancillary assets.

Some $330 million will be allocated for general corporate purposes, including transaction costs, strategic investments, acquisitions, fixed commitments, and development or redevelopment of existing assets.

“Building from a position of strength and expertise, the rights issue will enhance the group’s ability to be agile and responsive to these trends, leverage its track record to capitalise on the above opportunities, and enable the Group to prepare a future-ready business,” the company says.

As at Dec 31 2020, the company’s net gearing was 0.99 times, down from 1.05 times as at Sept 30 2020. This was because of the divestment of its 63.11% stake in AsiaRetail Fund (formerly known as PGIM Real Estate AsiaRetail Fund) to Frasers Centrepoint Trust, and an equity fund raising by FCT. 

Purely for illustrative purposes only, upon completion of the rights issue, Frasers Property’s pro forma net gearing as at Dec 31 will further decrease to 0.85 times.

This fund-raising exercise, which is not under-written, is managed by DBS Bank.