Hutchison Whampoa Ltd (和記黃埔), controlled by billionaire Li Ka-shing (李嘉誠), is seeking US$5.83 billion from the sale of Chinese port assets in what may be Singapore’s biggest initial public offering (IPO).
The world’s largest operator of container terminals is offering about 5.4 billion units in a trust at a price of US$0.91 to US$1.08 each, according to a term sheet. Hong Kong-based Hutchison announced plans for the sale in January.
Cornerstone investors led by Capital Research & Management Co and Paulson & Co will invest US$1.62 billion in the IPO, Hutchison said in a statement yesterday, as China’s growing exports fuel container-shipping volumes. The sale could surpass the US$4 billion raised in Singapore Telecommunications Ltd’s 1993 IPO and the total amount raised in Singapore IPOs last year.
“The asset held by the trust are good because of the increasing trade that will come globally and within Asia,” said Daphne Roth, head of Asian equity research at ABN Amro Private Banking, which oversees about US$14 billion in the region.
The trust will own assets including container terminals in Hong Kong and neighboring Guangdong Province. Hutchison will manage the trust and retain a 25 percent stake, according to a Jan. 18 statement. The trust will have a total market value of as much as US$9.4 billion, according to yesterday’s statement.
Hutchison rose 1.6 percent to HK$91.45 at 3:02pm in Hong Kong trading yesterday. The company, which also invests in real estate, oil and gas, drugstores and mobile phone services, has jumped 15 percent this year, outperforming the benchmark Hang Seng Index’s 1.4 percent gain.
Singapore’s benchmark Straits Times Index has fallen 5.2 percent this year as political instability in the Middle East and North Africa boosts oil prices. The share slump may damp investor demand for the Hutchison Port sale, said Francis Lun (藺常念), general manager at Fulbright Securities Ltd (富昌證券) in Hong Kong.
“It may be a little too big for the current market conditions,” he said. “Rising oil prices have been causing global markets to fall.”
China Hongqiao Group Ltd (中國宏橋集團), the country’s largest privately owned aluminum producer, scrapped plans for an IPO in Hong Kong in January because of a “deterioration in market conditions.”
Perennial China Retail Trust (鵬瑞利中國零售信托), which owns Chinese malls, is pushing ahead with plans to raise as much as S$1.1 billion (US$865 million) in a Singapore IPO.
IPO proceeds in Singapore last year totaled US$5.7 billion, led by Global Logistic Properties Ltd’s S$3.45 billion offering, according to data compiled by Bloomberg that excludes overallotment options. By comparison, Hong Kong IPOs raised US$49.5 billion, according to Bloomberg data.
Hutchison opted to sell the port assets in Singapore as business trusts can’t be listed in Hong Kong. The company chose a trust structure because of the assets’ stable cashflow and growth potential, it said in January.
Asia-US container volumes may grow 8 percent this year following a jump of more than 15 percent last year as consumers resume purchases of Chinese-made goods following the end of the global recession, the Transpacific Stabilization Agreement, a shipping line group, said in a Feb. 4 statement.
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