Fate is kind to me, I was not allocated any shares for the IPO of Religare Health Trust. It tanked on the first day of trading (22 Oct 2012). From IPO price of 90 cents, it dropped to 80 cents and at the lowest point in time, it traded at S$0.785.
The reason for trying for this IPO was to diversify my portfolio further into Healthcare which is supposed to be defensive in nature. Fortis has injected part of their hospital assets into this trust and waived their entitlement to the dividends for 2 years. At 80 cents, the dividend yield projected would be 10% right now. If including sponsor share, the yield would be probably 8% which is still extremely tempting.
Risk of holding on to this trust are as follows:
(i) Currency risk. But this has been mitigated by 2 year forward contracts entered by managing agent.
(ii) High dividend yield due to sponser Fortis waiving off their share for 2 years.
(iii) Political stability and business environment. There is also a perceived lack of trust in assets based in India.
Interestingly, an Indian friend told me that if I am really so keen to invest in India, why not just put the money in India fixed deposits which is giving an interest of 8%.....hmm....very true indeed.....
is it really tempting? considering indian government bonds yield 8%
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