SINGAPORE (Nov 19): The trustee-manager of Ascendas India Trust (a-iTrust) has announced a private placement to raise gross proceeds of at least $100.0 million to help fund a potential investment in a business park in Bangalore.
Under the private placement, a-iTrust will issue at least 66.3 million new units at an issue price of between $1.465 and $1.508.
The issue price range represents a discount of between 2.9% and 5.7% for the volume weighted average price (VWAP) for trades done on Nov 18 – the last trading day before the placement agreement was signed.
The issue price will be determined by the trustee-manager and the joint bookrunners and underwriters – Citigroup Global Markets Singapore and DBS Bank – following a book-building process.
The trustee-manager intends to use some $98.0 million, or 98% of the gross proceeds of the private placement, to partially finance the initial upfront funding of Phase 1 of a potential investment by way of forward purchase of a business park in Bangalore.
a-iTrust will provide project funding in the development phase prior to the acquisition of the relevant phase, which will take place when each development phase is completed.
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The development of the entire project is estimated to be carried out across several phases over approximately 10 years, subject to market demand.
Phase 1 of the project, which will see a-iTrust pay INR7.5 billion ($144 million) through the subscription of non-convertible debentures, involves an estimated total net leasable area of 1.7 million sqft that is envisaged to be constructed and acquired within four years from the date of first disbursement.
Upon completion of the construction, a-iTrust is expected to subsequently acquire Phase 1 of the project by paying the vendor a top-up consideration based on the rental, rental escalation, and leasing level at the time of the acquisition of the completed phase.
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Depending on the conditions present at the time of sale, the acquisition price – including the top-up consideration – for Phase 1 of the project is currently not expected to exceed INR17.3 billion.
The trustee-manager says the potential investment will enable a-iTrust to expand its presence in Bangalore, which is currently witnessing robust rental growth arising from healthy demand from global blue chip companies.
It says it believes that the private placement is an overall efficient and beneficial method of raising funds to partially finance the potential investment.
However, the trustee-manager adds that there is no assurance that the potential investment will materialise.
The potential investment is still subject to the completion of negotiations with a third party vendor, satisfactory due diligence, and the entry into a legally binding agreement with the vendor.
In the event that the potential investment does not materialise, the net proceeds of the private placement will go towards project funding for existing committed pipeline projects which have been announced and to repay existing indebtedness.
a-iTrust called for a trading halt before market open on Tuesday for the announcement. Units in a-iTrust closed at $1.54 on Monday.
