ASIA - Tesco Lotus has launched a multi-billion listed Thai property fund with a portfolio consisting of 17 shopping malls.
The initial public offering (IPO), which is accepting subscriptions until March 2, is said to be the country's largest ever.
Tesco Lotus, the Asian joint venture of UK retail giant Tesco, expects to raise THB18bn (€438m) for its Retail Growth Freehold and Leasehold Property Fund, which it claims has the most "geographically diverse" property portfolio in the country.
The company pledged to remain as an anchor tenant in all of the 17 shopping centres, of which more than a third are in Bangkok and the rest located in tourist destinations and other growing Thai cities.
Chris Bush, chief executive at Tesco Lotus, said the fund was "well positioned to capitalise on the steady growth of the Thai economy, the strength of the retail sector and increasing wealth and consumption across the country."
Sompong Rungnirattisai, property director at Tesco Lotus, said the malls included some of the company's best-performing assets, with an occupancy rate of 99%.
Rungnirattisai also revealed plans to establish an acquisition pipeline in future. He said: "Tesco Lotus expects to inject at least an additional two assets into the property fund before the end of fiscal year 2012-13, with plans to continue adding at least one to two assets to the property fund on an annual basis, bringing in more income to the fund and supporting its growth."
The assets have an average age of seven years, with the majority on freehold leases, covering hypermarket and food court areas, as well as malls. Tesco Lotus will retain its position as property manager across all the assets.
The IPO will free up capital for Tesco Lotus and the move is comparable with Tesco's decision in 2008 to enter into a £600m (€760m) sale-and-leaseback deal on its UK property assets with its own corporate pension fund.