Business

Wednesday November 18, 2009

CapitaMalls IPO to raise US$1.8bil


Parent CapitaLand plays it safe on pricing

SINGAPORE: CapitaLand will raise US$1.8bil through the IPO of its shopping malls unit, playing it safe on the pricing after some Asian IPOs faltered recently due to valuation concerns.

CapitaMalls Asia’s IPO has been priced at S$2.12 a share, according to an issue prospectus, below the midpoint of an indicative range of S$1.98–S$2.39 a share.

The conservative pricing was aimed at ensuring the IPO trades well after it debuts on the stock market on Nov 25, said a source with direct knowledge of the deal.

“The book was very well covered from long-only investors,” said the source, adding that US and European investors participated heavily in the offering.

“This IPO could have been priced higher, but the aim was not to squeeze investors,” the source said.

The CapitaMalls IPO will be the biggest in the city-state in 16 years. It follows Maxis’s US$3.3bil IPO in Malaysia, South-East Asia’s biggest share offering ever, as Asian companies rush in to take advantage of recovering stock markets.

Asia has been a hotspot for IPOs this year led by multi-billion dollar deals in China, but some newly listed companies such as China Merchants Securities, Glorious Property Holdings and Australian department store chain Myer Holdings have had poor debuts, raising concerns about valuations.

CapitaLand is selling 1.165 billion shares, or 30%, in its wholly owned CapitalMalls Asia unit.

This will be Singapore’s second biggest share offering since Singapore Telecommunications raised S$4bil in 1993.

CapitaMalls manages and has interests in 86 retail properties worth US$14.4bil in Singapore, China, Malaysia, Japan and India.

CapitaLand, which is 40% owned by Singapore wealth fund Temasek, may pay a dividend from the proceeds of the IPO and also use it to invest in residential and other projects such as hospitality, some analysts said.

“The spinoff would help raise capital for residential projects and accelerate growth in other businesses,” said an analyst at a European brokerage.

Macquarie Securities said in a research note on Monday that CapitaLand could take advantage of a faster-than-expected recovery in Asia’s property market.

“This exercise (IPO) helps the group to recycle capital to fund future growth in China and Vietnam, its serviced apartment business and opportunities for residential land acquisitions where possible,” analysts Tuck Yin Soong and Elaine Cheong said in a note. — Reuters


For another perspective from The Straits Times, a partner of Asia News Network, click here.


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