Equity fundraising is a common practice for a REIT to raise funds mainly for property acquisition or strengthen its balance sheets. Equity fundraising (EFR) refers to the process of raising capital through the issuance of new shares. There are 5 types of equity fundraising that employed by Singapore REITs throughout the years:
1) Private Placement
- Offer to institutional or selected investors.
2) Preferential Offering
- Non-renounceable offer to the retail investor, the entitlement is not tradeable nor transferable.
3) Rights Issue
- Renouceable offer to the retail investor, the entitlement is tradeable during the rights trading period. investors can sell the entitlement (nil-paid rights) if they are not intended to take up the offer.
4) Consideration Units
- Issuance of new units to the vendor for acquisition payment.
5) ATM Offering
- Offer new units to the public, similar to IPO, this is not common nowadays.
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