CapitaLand to raise US$1.8b from listing of malls unit

SINGAPORE: Singapore's CapitaLand will raise US$1.8 billion (US$1 = RM3.37) from listing its shopping malls unit, drawing strong investor interest for an offer that was modestly priced after some Asian IPOs faltered recently due to valuation concerns.

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

The CapitaMalls Asia offering was priced at S$2.12 (S$1 = RM2.43) a share, according to an issue prospectus, below the midpoint of an indicative range of S$1.98-S$2.39 a share. The shares will now be offered to retail investors and start trading on November 25.

CapitaLand will make a one-time gain of S$883 million, or about 23 Singapore cents a share, from selling the 30 percent stake in the business, and the firm said it may give shareholders a special dividend.
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.

Merchants Securities made a weak debut in Shanghai yesterday, closing up only 8.4 per cent from its IPO price - the worst debut performance for a newly listed stock on the mainland since a ban on IPOs was lifted.

The conservative pricing for CapitaMalls is aimed at ensuring the share trades well after it debuts on the stock market on November 25, said a source.

"The book was very well covered from long-only investors," said the source, adding US and European investors participated heavily in the IPO.

"This IPO could have been priced higher, but the aim was not to squeeze investors." CapitaLand is selling 1.165 billion shares in CapitaMalls Asia to raise S$2.47 billion, making it Singapore's second-biggest IPO behind the Singapore Telecommunications offering that raised S$4 billion in 1993.

JPMorgan is the sole financial adviser, and issue manager with DBS. The two banks are also bookrunners with Deutsche Bank and Credit Suisse, according to the prospectus.

CapitaMalls manages and has interests in 86 retail properties worth S$14.4 billion in Singapore, China, Malaysia, Japan and India. CapitaLand suspended its shares for trading early yesterday, but ended 2.4 per cent lower by close of trade as traders had expected the IPO would price higher.

Besides increasing its dividend, CapitaLand, which is 40 per cent owned by Singapore wealth fund Temasek, may also use the proceeds to invest in residential and other projects such as hospitality, some analysts said.

By Reuters