CapitaMalls’ bumper IPO lifts market

CapitaMalls’ bumper IPO lifts market

Its $2b-plus debut is a bonanza after a flat year for new stock listings

By Lee Su Shyan , ASSISTANT MONEY EDITOR

CapitaMalls Asia’s retail mall businesses include Wangjing Mall (first picture) in Beijing, Ion Orchard (second picture) in Singapore and Izumiya Hirakata (above) in Japan’s Osaka prefecture.
THERE was no ignoring the huge CapitaMalls Asia listing this week. After all, it likely pulled in more cash than the total amount raised by the 60 other initial public offerings (IPOs) held since January last year.

The company’s $2 billion-plus stock market debut brought the tally of funds raised to $2.87 billion for this year and outweighing the $1.95 billion raised last year.

It was a headline-making bonanza to end a flat year and while bankers reckon that large IPOs may return next year, no one expects similar-sized blockbusters, given the still-fragile economy.

Without CapitaMalls Asia - ranked by Reuters as the 10th-largest IPO globally this year - the year would have been one of paltry takings.

It also came as a pre-Christmas present as few could have foreseen such a bumper end to a year that started on a weak note.

Wong Partnership’s head of capital markets and corporate department, MsRachel Eng, said: ‘IPOs this year were primarily (offered by) the smaller companies. This is not surprising since major businesses were affected by the global financial crisis.

‘With this, their profit track record will be affected. Further, when equity prices of listed companies are low, there is little incentive for investors to buy IPO stocks.’

There had been only three listings up to June - all on Catalist. Westminster Travel, Japan Foods and Teho International chanced their arms but raised only about $10 million in combined net proceeds.

It took until August for the first mainboard listing: PEC, a firm providing engineering, procurement and construction services, which raised $25 million.

There have been 25 IPOs this year, including CapitaMalls Asia and firms undertaking reverse takeovers.

Just over half the IPOs were on Catalist, a contrast to last year when only 10 Catalist companies listed out of 36 IPOs.

Bankers said the weak markets deterred companies from going public and selling a stake in their enterprise at ‘cheap’ prices.

That may have contributed to the larger proportion of Catalist companies listing. The minimum public float is 15 per cent instead of the 25 per cent required by the mainboard. And they can later move to the mainboard.

The picture is expected to improve next year. London Stock Exchange chief executive Xavier Rolet was quoted by Reuters earlier this week as saying that the pipeline for IPOs ‘appears promising for 2010′.

Shook Lin & Bok partner Robson Lee is cautiously optimistic about the prospects for listings next year, saying: ‘Although there may be some signs of a bubble forming elsewhere in Hong Kong and China, it looks as if the recovery in Singapore will be on a firmer footing next year.’

One thing seems more than likely: the IPOs are set to be bigger.

Wong Partnership’s Ms Eng expects a few large listings, and perhaps some from the Reit sector.

‘For the majority, despite the pick-up in sentiment, their 2009 profit and loss may be weak,’ she added.

‘If so, they may need to wait for their half-year 2010 results to show investors that their business is out of the crisis and is continuing to grow.

‘Ahead of that, if they are reasonably confident, they may start to prepare for their IPOs early next year.’

But there are still a few speed bumps to negotiate before the IPO market is back on easy street. One is that Chinese companies, once the mainstay of the Singapore IPO market, are no longer the force they once were.

The Chinese government’s rules on overseas listings date back to 2006 and are still hampering firms from venturing offshore.

Only eight Chinese companies listed here out of a total of 25 IPOs, compared with 15 in last year’s 36 listings.

Meanwhile, other markets are also wooing Chinese companies.

Malaysia has attracted three Chinese sports shoes manufacturers - XiDeLang Holdings, Xingquan International Sports Holdings and Multi Sports - although all have underperformed their IPO price.

‘The approval process is speedy but thorough,’ said a banker, referring to one of Malaysia’s advantages.

South Korea has also had some success in wooing Chinese companies, while some analysts believe the Thai stock market could see a revival next year.

Also, the valuations offered by the Hong Kong market are consistently stronger than those in Singapore, and it continues to attract many companies.

Dr Ernest Kan, who heads Deloitte and Touche’s offerings group in the region, said that while valuations are an important factor, Singapore has a selling point in its strong corporate governance regime.

Source : Straits Times - 28 November 2009

Buy Sell Rent invest In Singapore Property Real Estate

MINDY YONG

( +65 ) 91002985

mindy@mindyyong.com

Credo Real Estate launches collective sale of Culford Garden at Siglap »« Two East Coast en bloc sites on market