Frasers Centrepoint Trust launched Preferential Offering on Tuesday, 8th April 2025. The preferential offering is intended to raise funds for its recent acquisition of Northpoint City South Wing at an agreed property value of S$1,133 million. The preferential offering will close on Wednesday, 16th April 2025. Should you accept the preferential offering?
For every 1,000 existing Units, unitholders are given 54 preferential offering units. The new units are offered at an issue price of S$2.050 per New Unit. This represents a discount of approximately 7.4% to the volume weighted average price (“VWAP”) of S$2.2136 per Unit. I shall share with you further below on how to accept and pay for the preferential offering units and things to consider.
What is Preferential offering?
A preferential offering is a type of stock offering where certain existing shareholders are given the opportunity to purchase additional shares of a company’s stock before the general public. This type of offering is often used to reward loyal or long-term shareholders, as well as to raise additional capital for the company.
Preferential offerings can be a way for companies to strengthen their relationships with existing investors by offering them the chance to increase their ownership stake in the company at a discounted price. This can help to increase shareholder loyalty and support for the company’s growth initiatives.
Overall, preferential offerings can be a win-win for both the company and its existing shareholders, as they provide a way to raise capital while also rewarding those who have shown faith in the company’s future prospects.
Should You Accept the Preferential Offering?
As you can see from the above, there are many reasons to accept the preferential offering. The acquisition is expected to be Distribution Per Unit (DPU) accretive. This means that distribution is expected to increase after the acquisition.
However, one of the factors to watch out for before you accept the offer is the current share price of Frasers Centrepoint Trust. Because of Trump’s tariffs, the global stock market has crashed this week. At this point of writing, Frasers Centrepoint Trust’s share price closed at S$2.12 on Friday, 11th April 2025. In fact, the share price hit a low of S$2.04 earlier this week which is close to the issue price of S$2.05 per unit.
I will wait until Tuesday which is 1 day before the closing of this preferential offering exercise before deciding whether to accept the offer. If Frasers Centrepoint Trust’s share price crashes below S$2.05, I will not be accepting the offer given that I can buy them at cheaper price off the stock market.
Based on the issue price of S$2.05 per unit and FY24 full year distribution per unit of 12.042 cents, the dividend yield will be 5.87%.
How to Accept and Pay for the Preferential Offering Units?
As per the screenshot I shared above, there are 3 ways you can accept the preferential offering units. You can either submit the application form accompanied by a cashier’s order or banker’s draft or accept online via Singapore Stock Exchange website. The last method is to apply via Automated Teller Machines (“ATM”) available island wide. For me, I always apply via Singapore Stock Exchange website.
Will I Accept Frasers Centrepoint Trust Preferential Offering?
As shared above, I will wait until Tuesday and look at Frasers Centrepoint Trust’s share price before deciding whether to accept the preferential offering units. I will also not be applying for excess units because Frasers Centrepoint Trust made up 6.91% which is a major component of my stock portfolio.