REIT IPOs Elicit Lukewarm Response From Retail Investors (The Korea Herald)

July 27, 2020 — The initial public offerings of South Korean real estate investment trusts are drawing lackluster response from retail investors before their listing on the local stock market, estimates showed Sunday. 

The latest was the undersubscription of the stock offering to individual investors, when JR Asset Management’s REIT was going public on the main bourse Kospi to invest in Finance Tower Complex in Brussels, Belgium. 

REITs are companies designed to generate returns for investors in the form of dividends, in return for investment in securitized real estate assets. 

Ahead of the REIT listing in August, none of the IPO underwriters — KB Securities, Meritz Securities and Daishin Securities — managed to sell the designated amount of shares to small investors worth a combined 240 billion won ($200 million). The shares were 0.23 times subscribed to small investors over the course of three-day retail tranche that wrapped up Friday. As a result, the three underwriters will hold the remaining amount of shares from the date of listing onward.

The news came despite JR’s move to encourage more small investors to engage in the IPO. Under the plan, any individual investor could be allotted up to 1 million won in shares for half of the available shares, regardless of how oversubscribed the retail split was. Under ordinary terms, the higher the degree of oversubscription the fewer shares each investor can possess in an IPO.

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