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

KARACHI: Ali Jameel, the chief executive officer of tech-driven conglomerate TPL Corp Limited, is “confident” that the bidding of its IPO for the first Shariah-compliant hybrid Real Estate Investment Trust (REIT) in Pakistan will be oversubscribed.

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

The TPL REIT is a part of the conglomerate's range of businesses scattered across various sectors and has demonstrated its expertise in the property sector via Centrepoint — its flagship project. It should be noted that the aforementioned project yielded TPL a Return on Investment (ROI) of 130 per cent.

The Fund is also known for its investment across a diversified pool of property assets including a premium-end luxurious 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 Pakistan’s central bank, TRG Pakistan, and other entities as a board member — said that the introduction of the IPO shows that the Pakistani market is developing and becoming sophisticated. “It most importantly demonstrates that Pakistan is open for business,” said the TPL CEO.

The offer on the IPO by TPL RMC is being made through the fixed price method at an offer price of Rs17.59 per unit.

Commenting on the vision behind the REIT, the businessman explained that it is aimed at bringing the unregulated and undocumented delisted sector towards documentation. “This will also improve the government’s taxation, and investors’ money will also get detected, as REIT has advantages for investors — far more than when they purchase from the informal sector,” he added.

Talking about the scope of the REIT in Pakistan, Jameel said it would take over 50 per cent of the property sector in the next 10 years. “Let’s say REIT is only Re1 and other sectors are Rs99, but in the next 10 years, I expect that the Re1 will become Rs40-50.”

The TPL chief was of the opinion that the Shariah-compliant REIT would be a “great success” for the Pakistan Stock Exchange (PSX) and the Securities and Exchange Commission of Pakistan (SECP) because a significant portion of the investor base in Pakistan mostly looks at Shariah-compliant structures.

“Therefore, Pakistan will again be at the forefront of Shariah-compliance in terms of REITs and it will also encourage the inclusion of more such REITs in the market. Introducing the first one always requires more hard work and we want more such REITs to be introduced".

According to Jameel, TPL wants the market to develop further through the launch of their IPO and the conglomerate will support its development as well.

Ali Asgher — the CEO of TPL REIT Management Company — told Geo.tv that the company’s vision is to have a Shariah-compliant formalisation of real estate so that retail and mid-sized investors would have a regulated Islamic instrument and a way to invest.

“Real estate is a very capital-intensive investment in which everyone can’t go in and take the big chunk. Therefore, a regulated structured product is the solution which was not available for a retail investor earlier,” he said.

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

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

Asgher also said that the IPO would be the largest one in the last few years with regard to market capitalisation and “not many such IPOs have taken place in Pakistan”, adding that a lot of efforts had been made to formalise the property sector and the SECP and PSX worked intensively with their listing regulation to smoothen their process.

Asgher hoped that through their company’s REIT, PSX's market capitalisation would increase by Rs32 billion, telling Geo.tv that "when a sector increases with more additions, it means that foreign investors, foreign funds and portfolio investors will also start looking at it. This will also pave the way for foreign investments because there will be sector eligibility".