Less need for institutional backing evident, fund chief says
Retail investors are likely to get a larger slice of the Link real estate investment trust (reit) when the government makes its second attempt to list it on the stock exchange, according to Patrick Sumner of Henderson Global Investors.
The British-based fund management company's head of global property equities said the enthusiastic response before last year's listing was derailed by a legal challenge meant the government would no longer require the participation of institutional investors as insurance against insufficient demand from retail investors.
'Last time they didn't know what the demand would be, but now they do,' Mr Sumner said in Hong Kong. 'So the situation will be very different this time.
'If there's a large private demand from private investors, then I guess it would be politically expedient for the government to give them a larger share.'
Henderson was one of the nine designated cornerstone investors - similar to strategic investors except they are not legally bound to hold shares for a designated period - in the first listing.
Mr Sumner said Henderson would not decide on how much of the relaunched reit it would subscribe to until the new pricing was announced. Although he expected the yield needed to be higher than the 6.65 per cent last time because of rising interest rates, he said the higher rates had not affected the quality of the reit's assets.
The first listing attempt was 130 times oversubscribed, with more than 500,000 subscribers recorded. Earlier this month, Secretary for Housing, Planning and Lands Michael Suen Ming-yeung announced that the Link Reit would be reoffered in December.
If Mr Sumner is correct, the biggest cheer is likely to come from the local investment fund sector, which has been lobbying hard against the proposal to bring in overseas institutional investors.
Hong Kong Investment Funds Association (HKIFA) chairwoman Elisabeth Scott raised the issue again this month when she said the local fund industry would be 'disappointed' if the government stuck to its cornerstone investor proposition in the relaunch.
The association complained that the selection process lacked transparency as Hong Kong pension fund investors and life insurance companies had not been approached to participate as cornerstone investors when the Link Reit was originally launched.
HKIFA executive director Sally Wong yesterday said the association had not received any response from the Housing Authority since filing a formal request for clarification on the investor selection process early this year.