More Business Trusts, REITs expected to list in S’pore next year

Singapore has been the largest initial public offering (IPO) market across Southeast Asia, raising S$6.2 billion year-to-date.

Looking ahead, analysts expect a healthy pipeline of Business Trusts and real estate investment trusts (REITs) to list in Singapore in 2014, despite concerns over rising interest rates.

Listing activity in other ASEAN markets such as Indonesia, Malaysia and Thailand is also expected to pick up in the second half of 2014.

Listings of REITs and Business Trusts continued to take centrestage in Singapore in 2013, with the likes of Asian Pay TV and the Mapletree Greater China Commercial Trust each raising over S$1 billion in their debut.

Asian Pay TV raised S$1.35 billion while Mapletree Greater China Commercial Trust raised S$1.68 billion.

As of November 2013, there were 25 new listings on the Singapore Exchange (SGX), compared with 23 listings in 2012.

While SGX is a favoured destination for Business Trusts and REITs, analysts said it is important that potential new listings offer better valuations or risk upcoming headwinds.

Daryl Liew, head of portfolio management at Reyl Singapore, said: “Tapering would probably hurt the Business Trusts and REITS a bit more. So if you are talking about sector risk then maybe, the Singapore IPO market will be affected a bit more than others because of the greater exposure to REITS and Business Trusts, which tend to be affected a bit more, especially when interest rates are going up.”

Robson Lee, partner at Shooklin & Bok, said: “It is a very popular investment for many investors, particularly retail, because you have a certain yield that is higher than interest rates. That will continue to be popular. The challenge is to come up with interesting REITs and Business Trusts which are not already listed in Singapore.”

Analysts also expect to see more businesses coming in to list through reverse takeovers (RTOs).

Mr Lee said: “SGX has beefed up quantitative criteria for Singapore listings so a lot of mainboard companies which are not doing well will be attractive candidates businesses that want to list but may not necessarily want to comply with new listing criteria.

“RTOs are also a popular listing structure now because you can do it in stages. You can take control first and continue the existing business and slowly inject new businesses over a period of time.”

Analysts are also expecting more Chinese companies to list in Singapore in 2014 since the direct listing platform has been established between SGX and China. And with the China Securities Regulatory Commission also reviewing applicants for their proposed listing in the Singapore market, experts said this augurs well for corporate governance.

Apart from China, SGX also signed a memorandum of understanding with the Hong Kong Exchange to collaborate on new technology and yuan-denominated product development.

Experts said this tie-up will be mutually beneficial for investors and is unlikely to jeopardise each other’s business.

Alvin Lim, head of Singapore advisory, global banking, at HSBC, said: “The Singapore market offers a certain diversity in terms of market exposure. So if you are a China company with focus on just China, then Hong Kong is a natural place. But if you are a Chinese company looking to be more international, then Singapore would be a potential market to list.”

Observers said SGX could also look into establishing its niche in Myanmar in order to capture potential business there.

Source : Channel NewsAsia – 27 Dec 2013

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