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S.F. Holding's Reit raises US$334 million after pricing Hong Kong IPO above midpoint

·3 min read

S.F. Holding's real estate investment trust has set the final offer price at HK$4.98 per unit, enabling the largest listed courier provider in China to raise about HK$2.6 billion (US$334.7 million) from its Hong Kong initial public offering.

The final price of the SF Real Estate Investment Trust (SF Reit) was set above the midpoint of the initial range of HK$4.68 to HK$5.16 marketed to investors, according to people familiar with the transaction. It will announce the final allotment results on Friday.

SF Reit is selling 520 million units to institutional and retail investors in its IPO, which ended on Monday. Trading of the units is expected to start next Monday, under the stock code "2191".

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SF Reit is the first logistics-focused Reit to be listed in Hong Kong. Credit Suisse, JPMorgan and DBS are the joint bookrunners of the deal, with DBS also assuming the role of sole listing agent for the deal.

Employees handle packages at an SF Express store in Hong Kong. Source: Bloomberg alt=Employees handle packages at an SF Express store in Hong Kong. Source: Bloomberg

The deal attracted interest from property specialists, private wealth managers and hedge funds among others, according to these people. The final offer price implies that the Reit will pay a distribution yield of 5.52 per cent on an annualised basis based on its 2021 earnings forecast of HK$112.4 million, the people added.

Shenzhen-listed S.F. Holding, which operates SF Express, is injecting three logistics centres worth HK$6.1 billion into the Reit as part of a plan to free up cash from its assets.

One of them is its crown jewel, the Asia Logistics Hub-SF Centre in Tsing Yi, Hong Kong, valued at HK$5.29 billion. The 15-storey centre has 160,322 square metres of floor space comprising an automated parcel-sorting facility and a distribution and warehousing facility.

The other two properties are a warehousing and distribution centre in Wuhu, Anhui province, worth about HK$264.7 million, and a distribution centre in Foshan, Guangdong province, estimated at HK$549.2 million, according to a filing to the Hong Kong bourse.

They had a net asset value of HK$2.24 billion as of March 31 and generated a combined unaudited profit of HK$32.8 million on HK$77.6 million of revenue in the first quarter this year. Audited net profit in 2020 was HK$26.9 million on HK$279 million of revenue.

S.F. Holding, whose SF Express is dubbed the FedEx of China, was founded by Wang Wei. Wang, 50, is China's fifth richest billionaire with a net worth of US$26.6 billion, according to Forbes. The Shenzhen-listed group, which posted a net loss of 989 million yuan during the first quarter, expects to book a one-off gain of not less than HK$800 million from the spin-off exercise.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.