Thursday, October 21, 2010

IPO gravy train back on track with GLP debut

Thu, Oct 21, 2010
The Business Times

By Jamie Lee

SINGAPORE - Global Logistic Properties (GLP) lived up to its billing on its trading debut yesterday, with the stock surging as much as 12 per cent.

This should help pave the way for more initial public offerings (IPOs) to come to market over the next few months, market watchers say, noting that GLP's good start - coupled with Mapletree Industrial Trust's (MIT) expected strong debut this Thursday - should inspire confidence in the listings market.

GLP shares shot to $2.19 at the start of trading before easing to $2.17 by the closing bell, up 21 cents from its IPO price of $1.96. Some 514 million GLP shares worth $1.11 billion changed hands in a single day.

'The performance was pretty much in line with what people expected,' said Chan Tuck Sing, UOB-Kay Hian executive director.

But the share price could pull back in the coming weeks since retail investors - who are likely to be the price movers for this stock - might have already picked up the gains they were looking for, while the upcoming debut of MIT could divert some interest from GLP, Mr Chan added. 'As far as institutional investors are concerned, I don't think there's a real need for them to chase the stock. So we might see the price consolidate.'

But Loh Hoon Sun, managing director of Phillip Securities, said that there should be some support for GLP if retail investors see the stock as a long-term investment.

GLP - which has Government of Singapore Investment Corporation (GIC) as its single-largest shareholder - could become the world's largest real estate IPO, if it exercises its overallotment option.

The world record is currently held by Hong Kong- listed Link real estate investment trust (Reit) which, in 2005, raised US$2.9 billion in its IPO.

GLP's IPO is Singapore's second-largest after Singapore Telecommunications' IPO in 1993, which raised S$4 billion.

Of the 1.76 billion GLP shares offered, 1.07 billion shares were placed out to institutional players and other investors in Singapore.

Another 102 million shares - or 5.82 per cent - were offered to the public, while 589 million shares were set aside for cornerstone investors. These include Alibaba Group, CB Richard Ellis, ING Clarion Real Estate Securities, Lion Global Investors, and former 'remisier king' Peter Lim.

GLP's cornerstone investors are free to sell their shares at any time, since they are not limited to a lock-up period for the shares they own, GLP's prospectus showed.

GLP's IPO also saw a windfall of $74.4 million for its CEO Ming Z Mei and its deputy chairman Jeffrey Schwartz, who sold 37.97 million vendor shares in total as part of the IPO.

Both own Schwartz-Mei Group (SMG), which held 6.8 per cent of GLP, with GIC holding the remainder.

Post-IPO, SMG's stake has been halved to 3.4 per cent, while GIC will hold a 51.5 per cent stake if the greenshoe option is fully exercised.

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