Sygnus says real estate IPO extension due to pension funds
Published:Friday | September 3, 2021 | 12:09 AMNeville Graham - Business Reporter
The one-month extension of the subscription period for the Sygnus Real Estate Finance Limited is to accommodate institutional investors, the company’s representatives said this week.
The Sygnus Real Estate initial public offering, which has been on the market since July 23, was to have closed on August 20, but the company later pushed the closing date out by three weeks to September 10.
Typically, the support of pension funds and other institutional investors is usually assured even before a transaction hits the market.
The delayed closing of the IPO comes amid indications of some softness in the equities market. The broad stock market is up seven per cent year to date, but down 1.8 per cent in the past quarter, as of Wednesday.
Group Chief Investment Officer at Sygnus Capital Jason Morris is downplaying the decline, saying other pandemic-related factors are at play. Sygnus Real Estate Finance is a member of the Sygnus Capital group.
“I wouldn’t say the market is soft,” said Morris.
“We’re in an environment where people are concerned about their health, and there is a restriction on movement. In short, there is a lot going on, so we extended the IPO,” he added, while noting that the period of extension is being used for further assessment of the market.
Sygnus Real Estate is seeking to raise up to US$25 million, or just under $4 billion in local currency, by offering 207,608,341 ordinary shares, upsizeable by a further 38,857,193 shares in the IPO. The offer is priced at USS$0.1270 and $19.30 per share. Existing shareholders and key investors will pay a discounted prices.
At least two investment firms, VM Wealth Management and CUMax, have recommended participation in the Sygnus IPO. However, none of the analysts contacted would comment on the IPO extension.
Morris insists the transaction does have the support of the investing public.
“We’ve seen significant support for the IPO, and we’re seeing a lot of interest from both institutional and individual investors,” he said. “When we are done raising the capital, we will press ahead with our mission of unlocking value from real estate.”
As to whether the offer is likely to be upsized, he said that was uncertain.
“At this stage we don’t know. What I can say is that a lot of pension funds are going through the approval process, made more difficult by the fact that some can’t go to office for meetings. We will have to wait and see, perhaps closer to the end of next week,” he added, regarding the extension date.
Morris said that in his experience, pension funds prefer to hold on to their funds until the last minute, since they could otherwise be earning interest on their money.
“If a pension fund is putting in, say, US$2 million, or $300 million, and they are still going through their sign-off process, then we can’t count that money until it’s fully committed,” he said.