Tesco set to launch IPO of Thai fund

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Tesco’s unit in Thailand is aiming to raise 18.4 billion baht (S$749 million) from the sale of a fund, in what may be the country’s largest initial public offering (IPO) since 2006.

Ek-Chai Distribution System Co will be selling 1.77 billion shares in the Tesco Lotus Retail Growth Freehold and Leasehold Property Fund from 9.65 baht (S$0.39) to 10.4 baht (S$0.42) apiece, according to Ek-Chai.

The fund will use the proceeds to acquire 17 shopping complexes anchored by Tesco Lotus stores from the retailer. The fund will generate revenue by leasing the stores back to Tesco and expects to yield a total annual distribution of 6.5 to seven percent.

England-based Tesco has been selling and leasing back its shopping outlets since 2004.

“This property fund will offer investors a way to capitalise on the growth of the Thai economy and retail sector,” said Christopher Bush, Chief Executive of Ek-Chai.

“We have a very strong pipeline of good assets that we can inject into the fund in the future.”

Tesco acquired US$2.5 billion (S$3.14 billion) in sales from Thailand in the six months through August, making the country its third biggest revenue source after the UK and South Korea.

The company operates over 900 stores, in which 133 are hypermarkets, and employs around 38,000 people in the country, noted Ek-Chai.

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