CapitaLand raises S$2.47 bil in shopping mall IPO

SINGAPORE: CapitaLand Ltd raised S$2.47 billion (RM6 billion) on Nov 17 selling shares in its CapitaMalls Asia Ltd unit in Singapore’s biggest IPO since at least 1993.

Southeast Asia’s largest real estate developer sold 1.165 billion CapitaMalls shares at S$2.12 each, according to a prospectus on the Monetary Authority of Singapore’s website. The shares were offered at between S$1.98 and S$2.39 apiece.

The money raised will allow CapitaMalls to expand in China, the world’s fastest-growing major economy, where it manages 50 retail properties of which 18 are under development. The company plans to buy land for new developments and to purchase completed malls and existing portfolios of retail properties, it said in the prospectus.

“CapitaMalls should do well because it’s a consumer story and right now, with the improved economic environment, that’s an area that should be robust going forward,” Brandon Lee, a Singapore-based analyst at DMG & Partners Securities Pte, said in a phone interview. “That’s especially the case in China where you’re looking at GDP growth in the double digits.”

The sale price represents about 1.55 times CapitaMalls’ September book value, a premium to CapitaLand’s 1.44 times, because the unit focuses on retail space and is more exposed to China growth, said a banker involved in the deal, who declined to be named because he is not authorised to speak to the media.

Hong Kong-listed Hang Lung Properties Ltd, which derives two-fifths of its revenue from China, is trading at 1.95 times, according to data compiled by Bloomberg.

The CapitaMalls share sale is the largest IPO in the city- state since Singapore Telecommunications Ltd’s initial offering in 1993 raised more than S$4 billion, and comes amid a resurgence in share sales in Asia where economic growth is forecast to outperform the US and Europe.

Sands China Ltd, the Macau unit of billionaire Sheldon Adelson’s casino company, plans to raise as much as HK$26 billion (RM11.31 billion) in a Hong Kong initial share sale, three people familiar with the matter said on Nov 9, while the listing of Swire Pacific Ltd’s property unit may net HK$30 billion, CLSA Asia-Pacific Markets Ltd estimated on Nov 3.

“There have been a lot of property IPOs globally and most of them have done pretty well,” Lee said. “You’ve seen Hyatt and Sands, and Swire is going to list as well, so you’re seeing a lot of quality guys going public. Interest rates in Asia have also remained low, so that’s put property in a good position with regard to other asset classes.”

The total property value of CapitaMalls’ Chinese interests is S$6.7 billion and 2,083 people, or 74% of its labour force, are employed there, according to the prospectus. The company manages 86 retail properties across Asia, with 27 projects under development, and property worth S$20.3 billion.

The Asia portfolio includes the Ion Orchard shopping mall in Singapore, a project jointly developed with Hong Kong’s Sun Hung Kai Properties Ltd. The centre, which opened in July, counts LVMH Moet Hennessy Louis Vuitton SA’s Louis Vuitton and Fast Retailing Co’s Uniqlo chain among its tenants.

CapitaLand said on Oct 5 it will retain majority control of the unit following the share sale and for the “foreseeable future”. Banks that helped arrange the sale include JPMorgan Chase & Co, DBS Group Holdings Ltd, Credit Suisse Group AG and Deutsche Bank AG, and the stock should list on Nov 25, the prospectus said. – Bloomberg LP

Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.