Homeplus withdraws listing plans for REIT

Homeplus, a Korean supermarket chain operator, said Thursday that it has decided to withdraw the planned listing of its real estate investment trust (REIT) on the country’s main bourse due to weaker-than-expected investor demand.

The company had been preparing for the initial public offering (IPO) of its REIT on the Kospi bourse later this month by taking 51 of its 141 stores across the country as its base assets.

“As the results of our demand forecast indicates that the value of our company cannot be properly assessed, we decided not to proceed with the IPO plan,” the company said in a release.

It had expected to raise up to 1.7 trillion won ($1.5 billion) by issuing shares at a price band of between 4,530 won and 5,000 won, but demand from overseas institutional investors fell short of its expectations, according to market insiders.

The company pointed out that offshore investors seem to be unfamiliar with a REIT listing from Korea and global economic circumstances are not stable enough for them to willingly go for such an investment tool.

“After enhancing capabilities, we will give it another try,” the company said without elaborating on future timetable.

The cancellation is expected to deal a blow to the country’s IPO market, which suffered a setback last year as several large-scale firms either withdrew or delayed their plans to sell shares over a bearish stock market.

If pursued as planned, Homeplus’ REIT could have been the largest corporate IPO since the market debut of Netmarble, the top mobile game developer, in 2017.

REITs are a type of security that invests in real estate to be traded on major exchanges and provides investors with stakes in real estate, such as office buildings, apartments and hotels.

In 2015, MBK Partners, a local private equity firm, purchased Homeplus from Tesco for 7.2 trillion won.

Yonhap