Stride's Investore IPO priced at top of the range

Stride Property's [NZX: STR] plan to spin out and list its Investore Property subsidiary has been priced at the top of the range by institutional investors in an initial public offering set to raise $185 million.

The IPO has been priced at $1.49 a share after the bookbuild was completed, with $170 million allocated to institutional investors and brokers, and $15 million set aside for eligible Stride shareholders, the property investor said in a statement. Investore also got commitments to subscribe for the full $15 million reserved for those shareholders who don't take up the offer. The indicative price range was between $1.37 and $1.49 a share.

"We are pleased with the strong support from our Stride shareholders to both the offer and our strategy at Stride," chairman Tim Storey said. "The successful completion of this offer provides further endorsement of Stride's strategy to create a specific investment opportunity through Investore and provides clear progress on our intent to grow our real estate investment management business."

Stride will distribute Investore shares to its own shareholders at a one-for-four ratio as part of a listing on the NZX main board. Stride will keep a 19.9% stake in Investore while Stride shareholders will collectively hold 33.4-38.2%.

The proceeds will help fund Investore's $267 million acquisition of 14 Countdown supermarkets, which will form part of the real estate investor's 39 large format retail properties portfolio.

The demerger is part of a broader initiative to grow Stride's management income without losing its portfolio investment entity (PIE) tax status, which lets tax payments be passed on to shareholders at the company's corporate tax rate if there are insufficient imputations credits available. The other arm to that will see Stride split out its property-owning unit from the real estate management division in a stapled structure, which means each is a separate legal entity but effectively operate in lock-step.

The Stride shareholder offer for the Investore IPO closes on July 5, and Investore will start trading on July 12.

Goldman Sachs New Zealand is the lead manager and sole bookrunner and arranger of the offer.

Stride shares rose 0.2% to $2.29 and have gained 5.1% so far this year.

(BusinessDesk)