BT : CapitaLand raises $2.8b from CapitaMalls Asia IPO

Business Times - 25 Nov 2009


CapitaLand raises $2.8b from CapitaMalls Asia IPO

By UMA SHANKARI

(SINGAPORE) Property group CapitaLand said that it raised $2.8 billion by selling 34.5 per cent of its retail arm CapitaMalls Asia (CMA) in its initial public offering (IPO).

Both the placement and retail shares were oversubscribed, and the company also released all over-allotment shares. In total, 1.34 billion shares were sold at $2.12 apiece.

The listing of CMA - which has a $20.3 billion portfolio of 86 malls in Singapore, China, Malaysia, Japan and India - is Singapore's biggest IPO since Singapore Telecommunications raised more than $4 billion in 1993.

Analysts expect CMA shares to gain today on their debut, fuelled by demand from institutional investors keen to gain exposure to China's fast-growing consumer market. More than half of CMA's malls are in China.

In a note, DMG & Partners analysts Brandon Lee and Jonathan Ng gave a valuation range of $2.42- $3.01 for CMA's shares. This is between 14 and 42 per cent above the IPO price of $2.12.

CapitaLand had earlier set an indicative range of $1.98 to $2.39 for the IPO, but later decided to price it below the mid-point of the range - a move that analysts said was to ensure that the stock trades well after it debuts.

CapitaLand yesterday reported demand of about 2.5 times for the placement tranche of 1.059 billion shares. An additional 174.8 million shares were over-allotted due to strong demand from investors.

Also, the public offer (excluding reserved shares) of 95 million shares was 4.9 times subscribed. In addition, all of the 11.7 million shares reserved for the directors, management, employees and business associates of the group were also taken up.

'Upon completion of the IPO and assuming the full exercise of the over-allotment option, CapitaLand's shareholding interest in CapitaMalls Asia will be reduced from 100 per cent to 65.5 per cent, and the IPO would have raised approximately $2.8 billion,' CapitaLand said.

CMA chief executive Lim Beng Chee said that the company is well-positioned to ride on strong consumerism trends in Asia and will continue to grow its business in the region, with an initial focus on China and Singapore.

CMA marks the sixth entity within the CapitaLand group to be listed on the Singapore Exchange. CapitaLand has previously said that it could record a one-time gain of $883 million from this IPO.

Part of the proceeds will be paid out as a special dividend to the group's shareholders. The company will also use some of its proceeds to invest in its residential and service residence business units. In particular, CapitaLand is looking at Singapore, China, Australia and Vietnam for growth for the overall group.

CapitaLand's shares lost four cents to close at $4.11 yesterday.