GIC explores Singapore listing of some of its property assets

IPO could raise up to US$1b even though the timing of the listing is fluid

(SINGAPORE) The Government of Singapore Investment Corp (GIC) is exploring a listing in Singapore of some of its property assets through an initial public offer of shares that could raise up to US$1 billion, Reuters reported yesterday, citing sources with knowledge of the deal.

A source told BT that the timetable for the IPO is 'very fluid' due to the current volatility in financial markets, but 'the intention to list the assets is quite clear'.

When contacted, GIC declined to comment. But the fund - which manages Singapore's foreign reserves, including pension savings, and invests only outside Singapore - has been in talks with major banks for several weeks now about its plans to list some of its assets, the source said.

No mandate has been awarded to any of the banks yet, but Citigroup and JP Morgan appeared to be the frontrunners to manage the IPO, according to the source. Both Citi and JP Morgan declined to comment.

'The proposal was to list their logistics business,' said a source that's aware of GIC's plan, according to Reuters. 'They could do an industrial Reit (real estate investment trust).'

The IPO would include assets in China and Japan that GIC bought for US$1.3 billion in 2008 from ProLogis, a New York-listed developer of warehouse facilities worldwide, Reuters reported, citing its own source.

Real estate accounted for 12 per cent of GIC's investment portfolio at the end of March 2009, up from 10 per cent a year earlier. GIC Real Estate, GIC's property investment arm, manages over 200 property investments across more than 30 countries, according to GIC's website.

Its property investments include brick-and-mortar assets, stocks of listed property companies, real estate investment trusts, as well as debt securities issued by real estate firms.

The investments span most property sectors, including office, retail, residential, industrial, and hotel, as well as niche sectors such as senior and student housing, and sports and medical facilities.

Not all the investments have been successful. Late last year, GIC wrote down most of its US$675 million investment in Stuyvesant Town and Peter Cooper Village, a large apartment complex in New York that was bought at the height of the property boom in the United States, but which then suffered from the collapse of the housing market there.

The vehicle that GIC chooses to list would need to disclose detailed information about its portfolio holdings, marking a departure from the secrecy that GIC usually applies to its investments.

But GIC could be seeking to list some of its assets to cash in on investments it made during the financial crisis that have since risen in value, without giving up control of the assets entirely.

'If you've held the assets for a reasonable period of time, then it makes sense to get some of your money back,' said one investment banker, who declined to be named. 'But maybe you still want to own a stake in the business.'

'Also the deal size may be quite large, and there may not be appetite from any single investor to buy an asset. That's another reason to do an IPO rather than a trade sale,' the banker said.

Source: Business Times, 27 May 2010