No point subscribing imho. It should also be noted that a substantial chunk of the money raised is to pare down debt. Let the underwriters eat this ill-timed, bad faith, Sponsor-bailing PO — always gratifying to see bankers lie in their self-made rose thorned bed.
For unitholders, just treat it as some sort of private placement, where institutional funds are paying for you to acquire more assets (allegedly DPU accretive) and help you reduce debt. Dilution is the price to pay yes but if it is DPU accretive - does it really hurt that much?
Do note however that if the underwriters are forced to eat this PO, they will be likely be looking to move these shares off their balance sheet asap, so expect severe downward pressures in the short term. If you are looking to acquire more LL REIT, should wait for this period to load up on even cheaper shares, when the underwriters unload.
Hi Edwin, thanks for sharing your thoughts! Good points especially on the off-loading part which will create severe downward pressure on LREIT's market price in the short term.
I agree with Edwin’s view. Banks underwriting the issue are unlikely to want to hold Lendlease REIT units for long. If they receive units at 0.558, they would probably be willing to offload them even at 0.555 just to reduce exposure, which effectively creates a near-term price ceiling for investors. I hold some Lendlease units and will receive rights, but if the market price remains around 0.555 on 17 March, I am unlikely to subscribe. It would be cheaper to buy from the market, and the underwriters may also be keen to offload any excess allocations.
No point subscribing imho. It should also be noted that a substantial chunk of the money raised is to pare down debt. Let the underwriters eat this ill-timed, bad faith, Sponsor-bailing PO — always gratifying to see bankers lie in their self-made rose thorned bed.
ReplyDeleteFor unitholders, just treat it as some sort of private placement, where institutional funds are paying for you to acquire more assets (allegedly DPU accretive) and help you reduce debt. Dilution is the price to pay yes but if it is DPU accretive - does it really hurt that much?
Do note however that if the underwriters are forced to eat this PO, they will be likely be looking to move these shares off their balance sheet asap, so expect severe downward pressures in the short term. If you are looking to acquire more LL REIT, should wait for this period to load up on even cheaper shares, when the underwriters unload.
Hi Edwin, thanks for sharing your thoughts! Good points especially on the off-loading part which will create severe downward pressure on LREIT's market price in the short term.
DeleteI agree with Edwin’s view. Banks underwriting the issue are unlikely to want to hold Lendlease REIT units for long. If they receive units at 0.558, they would probably be willing to offload them even at 0.555 just to reduce exposure, which effectively creates a near-term price ceiling for investors. I hold some Lendlease units and will receive rights, but if the market price remains around 0.555 on 17 March, I am unlikely to subscribe. It would be cheaper to buy from the market, and the underwriters may also be keen to offload any excess allocations.
ReplyDeleteHi Choon Yuan, great to hear your thoughts on the Lendlease Rights Exercise! Thanks for sharing man!
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