Market observers rueing another lull year for IPOs in the Singapore market might see a slight uptick in activity as the year draws to a close. This time last year, Nanofilm Technologies International’s big listing, which vaulted it to unicorn status, sparked optimism that the IPO drought will end and that more tech companies will follow, along with other big cap issues riding on euphoria brought about by the availability of vaccines.
However, things slowed entering 2021. For the first 10 months, there were just four listings, none of which drew the same kind of excitement. Having “lost” big homegrown names such as Razer, Sea and Grab to either US or Hong Kong, there was another sigh as TDCX, which provides business processing services, chose to list on the New York Stock Exchange and is now sitting pretty on a hefty market cap of US$3.5 billion ($4.7 billion).
Yet, signs of a year-end listing surge have manifested. On Nov 11, Trans China Automotive, a car distributor based in Hong Kong and Shenzhen, opened at 24.5 cents, slightly higher from its offer price of 23 cents.
On Nov 3, homegrown entity Mooreast, which is advised by W Capital, lodged its prospectus. The company started off servicing the offshore and marine (O&M) segment, providing mooring services to vessels. However, it is now focused on servicing the renewable energy sector.
Over the last fortnight or so, at least three SPACs, or special acquisition purpose companies, have reportedly applied for a listing as well, as they take advantage of newly-introduced regulatory framework for SPACs. The SPACs are by Tikehau Capital, Vertex Ventures and Novo Tellus Capital Partners.
As Singapore tries to woo new listings, especially the high tech, homegrown ones, there is the by-now “traditional strength” it is still very much playing to: a leading exchange for REITs — including those with assets and managers outside Singapore.
On Nov 10, Daiwa House Logistics Trust (DLHT) filed its application. It will be the first REIT IPO in 20 months. The sponsor, Daiwa House Industry Co, is a leading construction and real estate company in Japan. The last REIT IPO was United Hampshire US REIT which listed in March 2021.
DLHT is not the first REIT from Japan, or with assets predominantly in Japan. Its predecessors include Saizen REIT, Accordia Golf Trust and Croseus Retail Trust. However, they have all been delisted, following respective buyout offers, enriching some investors but cheesing off others along the way. Both Saizen and Croesus delisted in October 2017 while Accordia completed its delisting just in August.
The initial portfolio of DHLT is likely to comprise 14 logistics properties in Japan with a net lettable area (NLA) of 423,920 sq m. The appraised value of the IPO portfolio is approximately JPY80.57 billion ($952.9 million). The agreed purchase value is estimated at JPY71.07 billion. Its pipeline of possible assets to be acquired are mainly logistics properties in Japan, Vietnam, Indonesia and Malaysia.
DHLT is forecasting an annualised 2021 distribution per unit yield in 2021 of around 6.3%, rising to 6.5% in 2022. The IPO price is estimated at 80 cents, and net asset value is likely to be 81 cents, giving a market cap of $540 million at IPO.
The cornerstone investors are Bangkok Life Assurance Public Co; Credit Suisse; various units of DBS Bank; Nomura Securities; DWS Investments Australia, Kuan Meng Investments which belongs to Philip Ng of Far East Organization; and Metro ARC Investments, a unit of Metro Holdings and Hazelview Securities.
Interestingly, the Singapore stock market seems to be drawing a growing list of Japanese investors and companies — even though they are not necessarily doing a straight IPO. Chaswood Resources, a struggling F&B operator, has inked a reverse takeover deal worth US$1 billion with Japanese lithium-ion battery maker 3DOM; OIO Holdings, which focuses on blockchain and crypto services, used to be engineering firm DLF Holdings. Last but certainly not least, there is education-tech firm Alpha DX Group, which was called Alpha Energy Holdings. Hopefully, this is a sign of growing depth and breadth of the market. After all, every bit helps.
Photo: Albert Chua of The Edge Singapore
