TPL chief confident of record IPO of Pakistan’s first Islamic REIT

KARACHI: Ali Jameel, the chief executive officer of technology group TPL Corp Limited, is “confident” that the IPO offering for Pakistan’s first Shariah-compliant hybrid Real Estate Investment Trust (REIT) will be oversubscribed.

TPL RMC is scheduled to launch the initial public offering (IPO) of its first Shariah-compliant hybrid REIT — TPL REIT Fund I — on May 2 and 3.

TPL REIT is part of the group’s range of businesses spread across various sectors and has proven its real estate expertise through Centrepoint – its flagship project. It should be noted that the aforementioned project yielded TPL a ROI of 130 percent.

The Fund is also known for investing in a diversified portfolio of assets, including a high-end luxury residential tower, a sustainable master-planned community and a first-of-its-kind technology park.

Talking to Geo.tv, Jameel — who was previously associated with the central bank of Pakistan, TRG Pakistan, and other entities as a board member — said the listing of the IPO shows that the Pakistani market is growing and evolving. “Most importantly it shows that Pakistan is open for business,” said TPL CEO.

The IPO offer by TPL RMC is through the fixed price method at an offer price of Rs 17.59 per unit.

Commenting on the vision behind the REIT, the entrepreneur explained that it aims to bring the anarchic and undocumented delisting sector towards documentation. “This will also improve the government’s taxation and investors’ money will also be tracked as REIT has advantages for investors – much more than when they buy from the informal sector,” he added.

Talking about the scope of REIT in Pakistan, Jameel said that it will take over 50 percent of the real estate sector in the next 10 years. “Suppose REIT is only Re1 and other sectors are Rs99, but in next 10 years, I expect Re1 to become Rs40-50.”

The TPL chief opined that the Shariah-compliant REIT would be a “big hit” for the Pakistan Stock Exchange (PSX) and the Securities and Exchange Commission of Pakistan (SECP) because a significant portion of the investment base in Pakistan mainly looks at structures that are Sharia compliant.

“Therefore, Pakistan will once again be at the forefront of Shariah compliance in terms of REITs and will also encourage the inclusion of more such REITs in the market. The introduction of the first always requires more hard work and we want to introduce more such ESAs.”

According to Jameel, TPL wants the market to grow further through its IPO launch and the group will also support its growth.

said Ali Asgher – CEO of TPL REIT Management Company Geo.tv that the company’s vision is to have a formalization of Shariah-compliant real estate so that small and medium-sized investors have a regulated Islamic instrument and way to invest.

“Real estate is a capital-intensive investment that not everyone can jump in and take the big chunk out of. So a regulated structured product is the solution that was not available to a retail investor earlier,” he said.

Asgher added that REIT, in Pakistan and around the world, is a safe and controlled investment product if one wants to invest in real estate. It caters to all kinds of investment bases — from large institutions to small private investors.

Talking about the expectations regarding the offer, TPL RMC Managing Director hoped to witness oversubscription. “Real estate is a promising sector in Pakistan but it lacks regulated instruments and structures which we are introducing insha’Allah and which have also been introduced by some people before us. I think there must be a huge demand for it,” he said.

Asgher also said that the IPO will be the biggest in recent years in terms of market capitalization and “not many such IPOs have taken place in Pakistan,” adding that many efforts have been made to formalize the real estate sector and the SECP and the PSX have worked intensively with their listing regulation to streamline their process.

Asgher hoped that through their company’s REIT, PSX’s market capitalization would increase by Rs 32 billion, saying Geo.tv that “when a sector grows with more additions, it means that foreign investors, foreign funds and portfolio investors will also start looking at it. This will also open the way for foreign investment because there will be sector eligibility”.