[BREAKING: APIP announces December IPO on London's AIM]

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Monday, November 28, 2016

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Specialist Mongolian developer Asia Pacific Investment Partners to launch December IPO in London

Hong-based real estate firm, APIP, plans full listing of its share capital on London’s alternative investment market

November 28 (South China Morning Post) Asia Pacific Investment Partners (APIP), the Hong Kong-based real estate developer, is to launch a full initial public offering in London next month, on the SME-dominated alternative investment market (AIM).

The company, which invests and develops properties primarily in Mongolia, has applied to list its entire share capital to trade on AIM, which allows smaller firms more flexibility than London’s main stock market.

APIP plans to use the funds raised, on further expansion of its real estate portfolio, including Mongolia’s middle-income residential market and providing mortgage loans to individuals and businesses in Mongolia, according to Lee Cashell, its chief executive officer, for which it has a licence.

Further down the line there could also be expansion into Myanmar and other emerging markets.

“We have spent the last 15 years in the Mongolian market,” Cashell said. “We believe the group is now well positioned to capitalise on the strong growth opportunities in the Mongolian economy.”

APIP’s revenue rose in the first half of the year to US$1.36 million compared with US$1.02 million in the same period last year.

The company has developed around 53,000 square metres of real estate across five developments in the country’s capital Ulaanbaatar, and holds eight plots of land on which it believes it can build a further 450,000 square metres.

Its real state assets in Mongolia were estimated to be worth US$312.8 million, according to DTZ Cushman & Wakefield.

APIP said it has “strong growth underpinned by current and near-term projects, future planned projects and development and growth of prime land bank at attract cost”.

“Cashell first indicated back in October 2012 he planned to float the company in Hong Kong by early 2014, but did not clarify why they ultimately decided to list in London.

Hong Kong still leads the world’s IPO market, but unlike London Stock Exchange it operates under the principle of “one share, one vote”, which prevents companies with a dual-class structure from floating their shares.

Hong Kong represented 22 per cent of worldwide listing funds in the first nine months of the year with 40 issuers, according to Thomson Reuters data. London accounted for 3.6 per cent with nine IPO issuers.

Link to article

 

Mongolian Property Firm Sets Sights on Myanmar and Beyond in Frontier IPO

November 28 (Frontera News) Fifteen years after starting a real estate business in Ulaanbaatar, American Lee Cashell is looking to take his company global.

From humble beginnings in 2001, Asia Pacific Investment Partners has grown into Mongolia’s largest integrated property company, combining development with estate agency, market research, construction and cement manufacturing. Now, Cashell, who runs APIP with his Mongolian wife, Tsendsuren Bordukh, is turning the group into an international concern by selling shares on the London Stock Exchange’s AIM board.

APIP has identified a pipeline of potential property investments in Myanmar, and has begun incorporating a domestic real estate agency business in the commercial capital, Yangon, the company said in a regulatory statement on Nov. 28. APIP plans a “cautious, research driven, agency-led expansion,” making use of local contacts, due diligence and fundamental analysis.

“We have spent the last 15 years in the Mongolian market building what we believe is the country’s only vertically integrated property development company,” Cashell, the CEO and Chairman, said in the statement. “Our research driven model provides us the insights necessary to take advantage of future opportunities in frontier markets.”

APIP reported an operating profit of $11.3 million for 2015 and net assets of $50.5 million as of June 30. The group’s Mongolian property investments include eight land bank lots; these are worth a combined $312.8 million, according to DTZ Cushman & Wakefield calculations that are based the market value and comparisons with finished properties as of Sept. 30. The IPO will provide additional funding for real estate and other businesses, according to the statement. Cashell declined to comment beyond the statement.

From tents

The company plans to expand research coverage from Mongolia and Myanmar to 15 emerging and frontier markets through its new Propeterra unit to help drive sales and related advisory services.

With last year’s commodity price declines weighing on Mongolia’s economy, APIP says it’s positioning to benefit from anticipated recovery. Demand for modern apartments will be driven by urbanization and a growing number of expats moving in as investment increases in road, rail and mining projects like the Oyu Tolgoi copper and gold mine, according to the statement. Around 60% of the country’s 3 million inhabitants were still living in traditional “ger” tents at the time of the most recent study in 2010.

What’s the Deal?

Luxury pads

Along with leadership in luxury real estate in Mongolia, APIP plans to expand into the growing middle-income sector. An example is a mixed-use development called Park Place, in Ulaanbaatar’s central business district. Estimated for completion in 2020, Park Place will feature luxury condominiums, a high-end 8,000 square-meter retail mall, and a 125-room luxury hotel. APIP is also in the process of obtaining final permissions to start work on Circus Residence and Oasis Residence, middle-income apartment projects also located within the CBD.

Malls

A shortage of modern shopping malls in Ulaanbaatar has driven up retail space occupancy rates to 97% from 85% five years ago. While average occupancy within the CBD dropped to an historic trough of 67.5% in August, the rate had been dragged down by the opening a month earlier of the Shangri-La mall, which only achieved about 30% occupancy at launch. Other malls in the district have maintained 98-100% occupancy, according to APIP’s statement, while average retail rents have risen 7.3% in the past five years.

Distress

The group says it expects continued opportunities to buy partially finished developments from smaller, often first-time, developers who are unable to complete their projects, and from local banks sitting on non-performing loans linked to real estate.

Introducing: The Mortgage

The residential mortgage market in Mongolia is in very early stages and its development has the potential to boost affordability. The group plans to use part of the IPO proceeds to introduce mortgage financing products to buyers of the group’s residential units.

Link to article

 

APIP press release:

Asia Pacific Investment Partners Ltd. Announces Intention to Float on AIM

November 28 -- Asia Pacific Investment Partners Limited (the "Company", together with its subsidiaries "APIP" or the "Group"), the research-driven emerging and frontier markets real estate development business, today announces its intention to apply for the admission of its entire issued and to be issued share capital to trading on AIM ("Admission"), a market operated by London Stock Exchange plc, and to conduct a placing of new shares with institutional and professional investors (the "Placing"). Dealings in the Company's shares on AIM are expected to commence in December 2016.  

Key Highlights 

A leading developer of Mongolian property with an established track record for quality and innovation

·         Has evolved into a leading vertically integrated developer of Mongolian property over the last 15 years by focusing on two key pillars - introducing new, innovative concepts to the Mongolian residential and mixed use/commercial/retail property market, and delivering projects with high quality external and internal design, construction and finishing

·         The Directors believe that the Group has established a reputation for delivering high quality projects built to meet the expectations of international tenants and wealthy domestic buyers

·         Innovative and high quality developments allowing the Group to build a strong brand in Mongolia

Vertically integrated model providing competitive advantage

·         The Directors believe that the Group is the only vertically integrated property developer in Mongolia, comprising real estate development, real estate agency, market research, construction services and cement manufacturing

·         The Directors believe that the Group's capabilities allow it to maximise value across the real estate value chain, encompassing activities such as asset origination, real estate project design and development, construction, raw material transportation, property sales, leasing and on-going property management

Differentiated marketing capabilities with international reach

·         The Directors believe that the Group is one of a few Mongolian real estate developers able to effectively access both international and domestic buyers

·         The Group actively uses multiple marketing channels, including websites, social media, electronic data mailings, sales agents and sub-agents, and attendance at industry conferences, as well as hosting seminars and property launch events in various locations around the world

·         The Group's international sales to buyers in multiple countries are supported by sales offices in Hong Kong, London and Singapore that enhance the Group's international reach and create a strong network in those markets where the Directors believe the Group can sell its properties

Strong growth underpinned by current and near term projects, future planned projects and development and growth of prime land bank at attractive cost

·         The Group has capitalised on the rapid economic growth experienced by Mongolia during most of the period in which the Group has operated to become one of the leading developers in that marketplace

·         Since its inception in 2001, the Group has completed the development of approximately 53,000 sqm in gross floor area ("GFA") of real estate across five developments in Ulaanbaatar

·         The Group currently has approximately 38,000 sqm in GFA (comprising approximately 33,000 sqm in gross saleable area ("GSA")) under construction on one site, the Olympic Residence. In addition, the Directors believe that the Group holds through land-use or land-possession rights, acquired over a number of years, a substantial land bank of eight lots in prime locations in and around Ulaanbaatar on which the Directors believe 450,000 sqm in GFA can be constructed. The Group currently has valid land-use or land-possession certificates in respect of six lots accounting for 341,050 sqm in GFA of the estimated buildable GFA. The Group's land-rights in respect of two lots that collectively account for 108,950 sqm of the estimated buildable GFA have expired and are in the process of being renewed. The Group has submitted applications to the relevant authority to update the expiration date of these land-possession certificates and the Directors expect these certificates to be updated with extended expiration dates in the ordinary course.

Experienced management with in-depth local knowledge

·         The Group's senior management team has an established development planning, execution and growth track record combined with in-depth local knowledge and experience

·         Lee Cashell, co-founder, Chairman and CEO, has been based in Mongolia for 15 years and has over 22 years of experience in the real estate, investment management and private equity industries and is married to Ms. Bordukh

·         Tsendsuren Bordukh, co-founder and President, is a Mongolian national and has more than 15 years of experience in real estate in Mongolia and was formerly a representative of the Mongolian Chamber of Commerce and Industry in Beijing

·         Andrew McGregor, CFO, has been based in Mongolia since 2014 and has 13 years of experience in the real estate, investment banking and private equity industries

Strong corporate governance and internal controls

·         5 of the Company's 7 directors are independent non-executives and are involved in strategic and high level operational decisions

·         The Directors believe that the Company's culture of strong corporate governance and established appropriate internal controls, including internal audit and legal counsel functions, is amongst the strongest found in companies operating in Mongolia and provides the Group with the ability to make timely strategic decisions, effectively control costs and maintain efficient operations 

Hannam & Partners (Advisory) LLP ("Hannam") is acting as Financial Adviser to the Company, with CLSA Singapore PTE LTD ("CLSA") and Exotix Partners LLP ("Exotix") as Joint Global Co-ordinators and Joint Bookrunners and Panmure Gordon (UK) Limited ("Panmure Gordon") as its Nominated Adviser and Broker. 

Lee Cashell, Chief Executive Officer of APIP, commented: 

"We have spent the last 15 years in the Mongolian market building what we believe is the country's only vertically integrated property development company, and we believe the Group is now well positioned to capitalise on the strong growth opportunities of the Mongolian economy. Our research driven model provides us the insights necessary to take advantage of future opportunities in frontier markets. This IPO will allow us to accelerate the Company's growth momentum by providing additional funding for our real estate and other businesses."

Link to release

 

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