ST : Small investors get a chance at mega IPO

Oct 12, 2010

Small investors get a chance at mega IPO

GIC sets aside 102m shares for the public at $1.96 apiece

By Francis Chan



THE Government of Singapore Investment Corporation (GIC) has, for the first time, swung open its doors for the man in the street to invest in one of its businesses.

Yesterday, Global Logistics Properties (GLP), the real estate unit of the sovereign wealth fund, launched what could be Singapore's largest initial public offering (IPO) since SingTel went public in 1993.

GLP is set to raise $3.45 billion by listing its shares - priced at $1.96 apiece - on the Singapore Exchange (SGX).

The IPO will comprise 1.76 billion shares, of which about 102 million will be offered to small-time investors.

Application for GLP shares opened at 6pm yesterday for retail investors, who must apply for at least 1,000 shares, or $1,960 worth of the counter.

As with most listings on the SGX, the lion's share of this widely anticipated IPO will go to institutional players and other larger investors. In GLP's case, this works out to about one billion shares.

The remaining 589 million shares will be taken up by 10 other parties with deeper pockets, often referred to as 'cornerstone investors'.

According to GLP chairman Jeffrey Schwartz, some of these cornerstone investors have already committed close to $1.2 billion in the firm.

They include establishments such as China's National Council for Social Security Fund, e-commerce firm Alibaba Group, and wealthy individuals like Singapore's former 'remisier king' Peter Lim.

However, if interest from the market is strong, another 235 million shares could be offered as part of an 'over-allotment' option.

This would bump up GLP's offer to about $3.9 billion, close to SingTel's $4 billion-plus deal launched 17 years ago.

GLP is a major player in the fast-growing modern logistics facilities market in China and Japan, two of Asia's largest economies.

It owns, manages and leases out a network of 296 properties located across 25 major cities in the two countries. Some of its multinational and domestic clients include Wal-Mart China, major logistics players such as DHL, FedEx, and UPS, and electronics giants Sony and Panasonic.

Dr Seet Ngee Huat, president of GIC Real Estate, said the capital raised from the IPO will help GLP maximise its growth potential.

'GLP is looking to position itself for long-term growth through this proposed listing,' added Dr Seet.

Mr Peter Lim told The Straits Times that the counter was a good investment with a lot of growth potential, especially in China.

Retail investors also welcomed the mega-IPO, but some like Mr Benjamin Tan, 47, have gripes about the modest size of the offer for retail investors, who would likely have to ballot for a stake.

'It's a GIC-backed share and their business is in a growing segment in China, so naturally I would be keen, but small-timers like me can only keep my fingers crossed and hope I get to take part,' added Mr Tan.

Analysts are expecting the counter to be 'hotly subscribed' owing to its GIC connection.

In a lunchtime note to clients yesterday, analysts from Kim Eng Securities said there was 'no harm subscribing' to the offer because of the 56.8 per cent controlling stake GIC retains in GLP.

GIC will remain as the largest single shareholder of GLP after the IPO.

The offer closes at 10am this Thursday and trading of the stock is expected to start next Monday.

franchan@sph.com.sg