CapitaMalls Asia shares priced at S$2.12 each, IPO to raise S$2.8b
By Wong Siew Ying, Channel NewsAsia | Posted: 18 November 2009 0023 hrs

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SINGAPORE: Southeast Asia's largest property developer CapitaLand will be raising up to S$2.8 billion from listing its Asian shopping malls unit, in one of the largest Singapore initial public offerings (IPO) in recent years.

The public will get to subscribe to the CapitaMalls Asia (CMA) IPO from 9am on November 18.

A secondary listing in China is also being explored for CMA, although CapitaLand said it is premature for now.

Affluent Asians are spending and generating demand for more shopping malls, and CMA - which manages 86 retail properties across 48 cities in Singapore, China, Malaysia, Japan and India – is likely to benefit.

The IPO will offer nearly 1.165 billion shares at S$2.12 each - implying a price-to-book value of 1.55 times.

Liew Mun Leong, CEO, CapitaLand Group said: "We have to conclude the price that can take off, where there will be good response to the price. At the same time, we have good returns back to CapitaLand.

"Most importantly, after listing, we leave something on the table to be happy about. We do not want to sort of squeeze the price at the stage where we get a lot of returns, but the investors may not benefit from it."

CMA's market capitalization of about S$8.2 billion will put it among the 20 largest companies in Singapore. CapitaLand has assured that CMA's listing will not take the shine away from its two retail property trusts - CapitaMall Trust and CapitaRetail China Trust.

Mr Liew said: "In so far as we can find assets that can be injected in, to create returns for shareholders, we put them into the REITs. It is like marrying a daughter out, but still the daughter is bringing back income.

"The income is still there, we still own 70 per cent of it, CapitaLand still owns 70 per cent of CMA, and CMA still owns 30 to 40 per cent of the REITs, so the flow of returns continues within the family."

Some market watchers said that CMA may attract investors looking for higher yielding investments.

Donald Han, managing director, Cushman & Wakefield said: "You are looking at investments that provide you with higher returns. In some cases, that is where CMA can fit into the bill, because they not only invest into projects that provide you with yields but they also take risks in terms of developing green sites for shopping centres and incubating them.

"At some stage, they will offload it, exit out and sell it potentially into its sister REITs, and that is where the element of profit will be recognised and derived for CMA holders."

CapitaLand said Asia is relatively under-shopped. For instance, only 20 per cent of retail sales in China are done through shopping malls, and in India it is about 5 per cent. So, the company said there is potential for them to jump in to reorganise the retail experience.

CapitaLand also said it has injected S$800 million of the net proceeds from its recent rights issue into CMA. In total, it has pumped S$3.6 billion into the Asian retail unit.

The Singapore IPO will close on November 23, with trading expected to begin on November 25.

- CNA/sc