PROPERTY developer CapitaLand yesterday unveiled an ambitious plan to list its retail arm, which could raise an estimated US$1 billion (S$1.4 billion) via an initial public offering (IPO).
WHERE THE MALLS AREIn a move seen as reflecting growing confidence in Asia’s shopping mall business, CapitaLand announced it had won the Singapore Exchange’s approval to list the shares of CapitaLand Retail, which will now be renamed CapitaMalls Asia (CMA).
The group’s decision to hive off its retail arm will allow it to accelerate the growth of its integrated shopping mall business, which will have direct access to capital markets, said chief executive officer Liew Mun Leong yesterday.
CapitaLand is expected to list 20 per cent to 30 per cent of CMA in an offering that Reuters said could raise at least US$1 billion.
This could take place by year-end or early next year, said chief financial officer Olivier Lim. He said it was too early to put a valuation on CMA. It is likely that the firm will seek shareholder approval for the proposal by the end of the month.
CapitaLand Retail’s net asset value as of end-June stood at $5.3 billion.
Its listing will be Singapore’s biggest IPO in recent times and signals a recovery in an IPO market that has languished since last year’s global financial crisis. It could possibly exceed that of Thai Beverage, which raised $1.37 billion in May 2006.
When listed, CMA will be one of Asia’s few pure-play shopping mall businesses by property value and geography. It will manage and have stakes in a portfolio of malls across Asia with a total property value of $20.3 billion.
Consisting of 86 retail properties spanning 48 cities in five Asian countries, it will count luxury mall Ion Orchard in Singapore’s Orchard Road as one of its recent high-profile developments.
Industry analysts expect the listing to be well received due to the attractive Asia growth story, especially in China and India.
DMG Research property analyst Brandon Lee said: ‘The move is generally quite positive, as it allows potential investors to participate in the potential upside of the greenfield malls CMA has in its portfolio.’
Another analyst, who declined to be named, noted that retail-based real estate investment trusts (Reits) have been the best performers of late.
‘It says that the market still loves the Asia retail story,’ he added.
CapitaLand’s Mr Liew told the media and analysts yesterday that CapitaLand sees tremendous long-term potential in Asia’s shopping mall sector.
With about 57 per cent of the world’s population, Asia is expected to experience strong growth in this industry, fuelled by rapid urbanisation, increasing affluence and spending power, he said.
Since 2002, CapitaLand’s retail business has grown tenfold, from about $1.8 billion to $20.3 billion as of end-June.
CapitaLand also revealed yesterday that it was looking at issuing a special dividend to shareholders, once it had considered various factors, including the gain following the listing.
Mr Liew emphasised that the listing was going to benefit the group, as it will ‘crystallise a gain… and unlock significant shareholder value’.
This will increase the overall financial capacity and flexibility of the real estate firm, he said.
CMA will assume control of CapitaLand’s retail real estate fund and property trust management business. So, ownership of the Reit managements of CapitaMall Trust and CapitaRetail China Trust will fall under CMA’s umbrella.
Both Reits will retain the existing rights-of-first-refusal on the acquisition of assets from CMA.
The new entity will give the company the potential to take on debt of $1.6 billion to $2.6 billion, allowing CMA to fund expansion plans across Asia.
CapitaLand chairman Richard Hu said in a statement that the proposed listing is ‘a logical evolution of CapitaLand’s business model… and is the right step to make CapitaLand one of the most successful real estate companies in Asia’.
Source : Straits Times – 6 Oct 2009
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