CAPITAMALLS Asia (CMA) is looking to raise up to $2.8 billion from what could turn out to be the largest initial public offering (IPO) here in more than a decade.
The wholly owned integrated shopping mall unit of property giant CapitaLand is to offer 1.165 billion shares at an indicative price range of between $1.98 and $2.39 per share, according to an e-mail sent to potential institutional investors by its sole financial adviser and joint bookrunner J.P. Morgan.
This would value CMA at a price-to-book ratio of 1.45 times to 1.75 times, the e-mail said.
Investor roadshows are on till Nov 16, with pricing due that day. The public offering will be launched on Nov 17 and will close seven days later.
Trading is expected to start on Nov 25.
CapitaLand announced early last month that it was listing its retail arm CapitaLand Retail, which it renamed CapitaMalls Asia.
The group sees tremendous potential in Asia’s shopping mall sector over the long term.
CMA’s portfolio comprises 86 retail properties valued at some $20.3 billion that are spread across 48 cities in Singapore, China, Malaysia, Japan and India.
The properties, of which 59 are completed, include the newly opened Ion Orchard in Singapore, which it jointly developed with Hong Kong’s Sun Hung Kai Properties.
Some analysts said the listing move was positive for CapitaLand and the mall unit, although there were concerns that the group’s two retail property trusts – CapitaMall Trust and CapitaRetail China Trust – would not derive so much benefit.
Following news of the proposed listing, shares of the two trusts fell on worries that institutional investors may want to re- allocate funds from the trusts into CMA.
CMA’s preliminary prospectus was lodged yesterday with the Monetary Authority of Singapore.
NRA Capital executive chairman Kevin Scully said: ‘If I were to look at the recent IPOs in China and Hong Kong, the big IPOs all raised more than US$1 billion (S$1.4 billion) each and they are all under water.
‘The yield curve is steep, signalling interest rates are likely to rise over the next six to nine months. This would not be favourable for Reit (real estate investment trust) investors.’
CapitaLand said in a statement following the market’s close yesterday that it had started meeting institutional investors to gauge demand for the proposed IPO.
This will ‘necessarily involve discussions of the indicative pricing and size’ of the proposed offering, it said.
CapitaLand reiterated that its decision to proceed with the IPO – as well as the size and pricing – will be subject to investor demand and prevailing capital market conditions.
The developer, which will continue to be a majority shareholder of CMA, had earlier said that it may recommend a special dividend after floating CMA.
CapitaLand shares closed 9 cents higher at $4.23.
STEEP YIELD CURVE
‘If I were to look at the recent IPOs in China and Hong Kong, the big IPOs all raised more than US$1 billion (S$1.4 billion) each and they are all under water. The yield curve is steep, signalling interest rates are likely to rise over the next six to nine months. This would not be favourable for Reit investors.’ – NRA Capital executive chairman Kevin Scully
Source : Straits Times – 3 Nov 2009
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