BANGKOK, Feb 20 – Tesco Plc , the world’s No.3 retailer, launched the initial public offering of its Thailand property fund today, aiming to raise up to US$585 million (RM1.77 billion) to finance future expansion.

The offering is part of a trend among retailers in recent years to squeeze more value from their real estate assets, bundling them into a property fund, selling the fund to investors and leasing back the property.

The fund, formally called Tesco Lotus Retail Growth Freehold and Leasehold Property Fund, comprises 17 shopping malls anchored by a Tesco Lotus hypermarket in cities including Bangkok and tourist destinations such as Krabi.

The property fund, similar to a real estate investment trust, or REIT, will offer shares at a price range of 9.65-10.40 baht each, putting the total deal at up to 18 billion baht (RM1.77 billion), Tesco’s Ek-Chai Distribution System Co unit said in a statement.

At that price, the fund would have a yield of 6.5 to 7 per cent per year.

The IPO, Thailand’s biggest since 2006 according to Tesco, received US$40 million in commitments from US fund manager The Capital Group Companies, two sources with direct knowledge of the deal said today.

Bank of America Merrill Lynch, Nomura Holdings Inc , Phatra Securities and Royal Bank of Scotland were hired to manage the IPO. – Reuters