Tesco, the United Kingdom’s largest retailer, plans to launch a Thailand property fund next month. The company is looking to raise up to US$500 million to unlock the value held in its considerable property assets. It will create the largest Thailand property fund dealing with retail premises and also the largest IPO in the country since the launch of Rayong Refinery in 2006.
Tesco is Thailand’s largest retailer, with over 800 individual units. However, the fund will centre on its largest landholdings of 15 premium shopping malls, all of which currently include a Tesco superstore. The superstores are the flagship outlets for Tesco in Thailand and under the plans, the company will continue to maintain their presence in each malls by leasing the space directly from the fund. This alone will ensure the fund maintains a regular income stream which is likely to be attractive for potential investors. The malls are located in Bangkok, major regional cities and tourist hotspots.
Tesco has performed extremely well in Thailand and the company’s Thai operations made a substantial contribution to global profits. As a result, Tesco is looking to expand by using cash generated from the Thailand property fund’s launch. Laurie McIlwee, Tesco’s CFO, said in September last year that the fund would ‘release value from our Thai property we will be able to invest in further innovation and growth for our customers and shareholders’.
Earlier this week, the company launched pre-marketing for the fund which will continue in the run up to the planned pricing announcement on 5 March, with the sale expecting to happen a couple of weeks later. A travelling roadshow is planned to publicise the deal around the country, although the markets are already abuzz with the news and have reacted favourably to the announcement.
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