MALAYSIA: Johor Corp (JCorp)’s Islamic real estate investment trust (REIT) IPO has been oversubscribed despite prevailing market volatility, demonstrating the high demand for Shariah compliant investment instruments amid a decline in Sukuk issuances.
The Al-Salam REIT IPO saw 252.36 million units offered: 11.6 million of which were made available to the Malaysian public and the remaining 240.76 million sold on a private placement basis, which has, the company confirmed in a statement, been fully placed out. Despite a softening real estate landscape (brought on by a series of cooling measures by the central bank) and choppy equity markets, the public portion of its IPO received almost three-fold in orderbook at 2.96 times from a total of 2,442 applications.
This latest REIT by the investment arm of the Johor state, is its second REIT and only the fourth Islamic REIT in the country, and is part of Al-Salam REIT’s expansion strategy (it plans to more than double its asset values to RM2 billion (US$468.57 million) from RM900 million (US$210.85 million) in the next few years). While four may ostensibly be a small figure, this nonetheless makes Malaysia the largest Islamic REIT issuer (by volume) in the world. To be listed on the Main Market of Bursa Malaysia on the 29th September, the Al-Salam REIT joins the Axis REIT, Al-Aqar Healthcare REIT (majority-owned by JCorp) and KLCC REIT, and will invest in commercial, retail, office and industrial assets of Johor Bahru.
RHB Investment Bank acted as the principal advisor, sole global coordinator and sole underwriter for the IPO. It, along with Maybank Investment Bank, are the joint placement agents for this product.