Frasers Centrepoint Trust Launches S\$400M Equity Fund Raising to Fuel Acquisition Ambitions

In a bold move that could have a significant impact on share prices, Frasers Centrepoint Trust (FCT) has announced its plan to raise at least S\$400 million through an equity fund raising. The exercise, structured as a dual-track offering, involves a private placement for institutional, accredited and expert investors and a non-renounceable preferential offering targeted at existing unitholders.

Key Points of the Fund Raising

• Total Target: Approximately S\$400 million in gross proceeds.
• Structure:
  • Private Placement: Target of at least S\$200 million, issuing Private Placement Units at a price between S\$2.070 and S\$2.113. The issue price represents a discount of approximately 4.5% to 6.5% relative to the preceding day’s VWAP of S\$2.2136—and roughly 1.8% to 3.8% relative to an adjusted VWAP of S\$2.1521.
  • Preferential Offering: Target of approximately S\$200 million, issuing Preferential Offering Units at a price between S\$2.030 and S\$2.070. This offering is available exclusively to eligible unitholders on a pro rata basis, with discounts of about 6.5% to 8.3% to the VWAP and 3.8% to 5.7% to the adjusted VWAP.
• Underwriting: The offering is fully backed by a consortium of underwriters including DBS Bank, Citigroup Global Markets Singapore, OCBC, UOB, and Maybank Securities. Under the underwriting agreement, the underwriters have committed to subscribe for or place out the new units if necessary.
• General Mandate: Issuance of New Units has been approved under the general mandate from the AGM held on 14 January 2025, allowing FCT to issue up to 50% additional units (subject to specific limits for non-pro rata allocations).

Price-Sensitive and Shareholder-Relevant Information

• Use of Proceeds: Approximately S\$394.2 million (98.6% of funds raised) is earmarked for debt repayment and partially for funding the acquisition of a 100% stake in North Gem Trust and its trustee-manager, Frasers Property North Gem Trustee Pte. Ltd. The remaining S\$5.8 million (1.4%) covers professional fees and related expenses. The acquisition is subject to unitholder approval and is expected to strengthen the Trust’s balance sheet.
• Distribution Adjustments: To ensure fairness among shareholders, the new Private Placement Units will not participate in the upcoming cumulative distribution declared for the period spanning from 1 October 2024 to the day before issuance, while holders of Preferential Offering Units will begin receiving subsequent distributions only after the issuance date.
• Sponsor Commitment: Frasers Property Limited, FCT’s sponsor, holding approximately 39.77% of the total units, has provided an irrevocable undertaking. This includes agreeing not to dispose of any units until the Record Date and ensuring full subscription for their provisional allotment in the preferential offering, which could stabilize and potentially lift the share price.
• Timetable: The timeline is tightly set with key dates starting on 25 March 2025 for the launch of the Private Placement, a Record Date on 3 April 2025, and listing of the new units commencing from 4 April 2025 for private placement units, followed by preferential offering units trading from 25 April 2025. This detailed schedule offers transparency and may influence market sentiment in the run-up to the listings.

Detailed Timeline and Process

The process will kick off with the launch of the Private Placement on 25 March 2025, closing the day after. The units will then be quoted on a “cum distribution” basis until 1 April 2025. Following the Record Date on 3 April 2025, which determines entitlement to the cumulative distribution and preferential offering eligibility, the Private Placement Units are expected to be listed and traded from 4 April 2025. The preferential offering will open on 8 April 2025 with the last date for acceptance and payment scheduled on 16 April 2025.

Potential Market Impact

With an acquisition at the heart of the strategy and a rigorous underwriting structure ensuring full subscription coverage, the move is poised to impact share values significantly. The detailed discount structure on issue prices, the strict eligibility criteria for preferential allotments, and the undisputed sponsor commitment all add layers of assurance and risk management. Investors should be alert to these price-sensitive aspects as they hold the potential to reshape investor sentiment and drive liquidity.

Disclaimer

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice. Share prices and market outcomes may be affected by multiple factors, and readers should carry out their own research or consult a qualified professional before making any investment decisions.