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One thing I dun like about having Temasek as a major share holder is the effect they have when they sell out their share, which they are known for, and cause a downward revision of the stock price. Leaving small retail investors like us spinning in their tailwind.
The source said that the banks managing the offering had received institutional orders for 15x the total number of shares in the deal, indicating strong interest.
If priced at the top end, the IPO would raise $286 million and give a yield of 7.75% for the financial year ending March 2008. Macquarie International Infrastructure Fund currently offers a dividend yield of 8.19% for the year ending December 2007, according to Reuters Estimates.
CitySpring plans to expand by acquiring infrastructure assets in Asia. It currently has 100% of the City Gas Trust, the sole producer and retailer of town gas, and 70% of SingSpring Trust, the sole supplier of desalinated water to PUB. Morgan Stanley
Following the IPO, Temasek will have a 28.5% stake in the trust, making it the single largest unit holder.
Units in CitySpring Infrastructure Trust are likely to be priced at the top end of the $0.77 to $0.89 indicative range, a source involved in the deal said on Friday. The source said there had been strong interest in the deal.
"When you have that sort of a demand you can expect it to be priced at the top end," the source said.
If priced at the top end, the deal would raise $286 million.
They have a book building exercise where they determine the demand and then price accordingly.
Experts, any opinion on this IPO?
This is not the first infrastructure stock in the market, there is also MacqIntInfra trust.
This IPO will be a hot cake.
As it is define as a defenive stock and steady return, IPO 1st day trading "Normally" high trading volume. (Not to say this HOT CAKE, will be even HOTTER!)
Likely everyone will cheong this counter in the 1st trading, even if they can't make it at ATM.
So confirm $1+ lor... Watch this counter!
Since this is a hot cake with cash apply at ATM. I think some players are withdrawing their counter today to get their cash on hand. As such some counters are dropping as a result!
Ok,, i will call their directors and discuss it with them. :)
Hope they dun reply :" It all boils down to your risk appetite ............... :)
Me think if the pricing is at the lower end of the scale, it will be more worth it for this stock :-)
Price for the trust range from $0.77 - $0.89 cents.
It will be determine on 05.02.07, the day when
application is close. Thereafter, they will announce the price of it.
My personal view,,, most likely @ abt.....
80cents to 85.
Goodluck :)
it link with infrastructural , risk is low, should consider as defensive stock.
Hi Madmike,
Kind to share with us your concern if going for CitySpring is worth it or not?
yes, now can apply at price $0.89 through ATM, but do not know worth or not?
Hi Mirage,
Thanks for the advice.... This Cityspring seems like a very good investment. Feel too bad to miss it... haha...
Yeah... know that its not good to use borrowed money. Guess I will just observe and see how. Thanks.
Hi guys,
Reading the newspaper today.
Wondering why there's a range of $0.77- $0.89 price for IPO?
How to get the offer of 0.77? Early bird apply in ATM?
Hi maxtwl, never invest with money you cannot afford to lose. If you are short of capital to invest never borrow money from ezycash to invest because there is much risk in vesting in stock, you may lose more than you gain. Just my personal opinion only. Save enough money then start investing.
There's a Cityspring Roadshow right in front of the Caltex House starting now......
Is it wise to loan from financial institutions like ezycash just to buy and invest in this counter? Interest rate from ezycash is high 1.6%. Very interested in this infrastructure trust, but lack of capital as I am a beginner.
can this be applied through ATM?
Thanks for the info.
Read that it is launching tomorrow.
Wonder if there is any roadshow for public????
Business Times - 25 Jan 2007
Hock Lock Siew
CitySpring's funding raises concerns
By MATTHEW PHAN
WHAT do Keppel Corp, SMRT, PSA International and SingTel have in common? All familiar names, each owns infrastructural assets critical to Singapore's everyday social and economic activity. They now also have a potential avenue to divest assets through the CitySpring Infrastructure Trust, a fund seeking a listing on the Singapore Exchange (SGX) that is sponsored by their parent Temasek Holdings.
It seems clear that CitySpring intends to grow by acquisition. Yet the initial public offering (IPO) is likely to be of limited size, which means CitySpring will rely on secondary issues to fund purchases. IPO investors should consider the implications.
CitySpring's distribution per unit for period from February 2006 to March 2007 is projected at only 0.96 cents, based on a projected income of $4.3 million divided by 450 million units. For the year ending in March 2008, the projected yield is six times higher - it will come to six cents per unit, based on a projected income of $27 million.
Further, projected revenues multiply from $41.7 million in the period from February 2006 to March 2007, to $262 million for the year ending March 2008.
Judging from the trust's initial stable and not terribly exciting assets - City Gas, Singapore's sole retailer of town gas, and SingSpring, its first desalination plant - growth will not be organic.
In its prospectus, CitySpring hints where acquisitions might come from. Its strategy is to invest in infrastructure assets in three sectors - utilities, transport and logistics, and telecommunications - focused in Asia, the Middle East, Australia and New Zealand.
Later, it lists sponsor Temasek's major infrastructure holdings, perhaps hinting at what is to come. Under utilities are Singapore Power, SembCorb Industries and Keppel Corp. Under transport and logistics are PSA International and SMRT Corp. Under telecoms, SingTel and ST Telemedia - which owns Starhub - are noted.
For these firms, CitySpring may prove a convenient vehicle to lighten balance sheets and improve liquidity ratios. Investors in these companies may read the trust's listing as a positive sign.
For CitiSpring itself, the question is how it will fund future acquisitions. According to the preliminary prospectus, only $0.7 million of the proceeds will go towards working capital and establishment costs. Most of the net proceeds will be used to acquire units in and notes of City Gas and SingSpring, the trust's initial assets, with little left over.
Debt financing may cover part of later acquisitions, but it is unclear how high CitySpring's gearing will be after it snaps up City Gas and SingSpring. The trust will acquire 100 per cent of City Gas, which has total assets of $222.2 million and net assets of about $160.9 million, and 70 per cent of SingSpring, which owns total assets of $223.3 million and net assets of $9.1 million.
A check with CitySpring confirmed that the trust's IPO capital is not a war chest to be saved for future purchases and it will depend on secondary rights issues to raise money each time it eyes a new target. This raises a few questions.
First, will IPO investors face the risk of dilution from secondary issues? The risk will be lower if they get preference for future rights issues; but if secondary issues are sold through private placement, dilution is certain.
Second, why has CitySpring chosen to raise only a small amount upfront, instead of raising a large sum of capital at the beginning, and using debt to finance further acquisitions? Backed by Temasek, a triple-A rated investment firm, its cost of debt is likely to be low. If it borrows at a low interest rate to fund a purchase that gives a high yield, the purchase is immediately yield-accretive. Conversely, funding a purchase by raising equity capital - which implies a higher cost of capital as well as incurring fees - may not be so cheap.
The financing decision would be easier to understand if CitySpring did not have any acquisitions on the horizon. But if there are several in the pipeline, why not raise a large sum upfront?
Still, shareholders have the chance to vote on CitySpring's subsequent capital raising measures for particular purchases. As such, retail investors might want to consider if major post-IPO shareholders in CitySpring might vote for decisions that run counter to minorities' interests.
Granted, the trust's performance will depend on the quality of its acquired assets. On that front, given Singapore's stability and relative prosperity, and Temasek's stable of assets, there is little to doubt for now.
Hock Lock Siew
CitySpring's funding raises concerns
By MATTHEW PHAN
WHAT do Keppel Corp, SMRT, PSA International and SingTel have in common? All familiar names, each owns infrastructural assets critical to Singapore's everyday social and economic activity. They now also have a potential avenue to divest assets through the CitySpring Infrastructure Trust, a fund seeking a listing on the Singapore Exchange (SGX) that is sponsored by their parent Temasek Holdings.
It seems clear that CitySpring intends to grow by acquisition. Yet the initial public offering (IPO) is likely to be of limited size, which means CitySpring will rely on secondary issues to fund purchases. IPO investors should consider the implications.
CitySpring's distribution per unit for period from February 2006 to March 2007 is projected at only 0.96 cents, based on a projected income of $4.3 million divided by 450 million units. For the year ending in March 2008, the projected yield is six times higher - it will come to six cents per unit, based on a projected income of $27 million.
Further, projected revenues multiply from $41.7 million in the period from February 2006 to March 2007, to $262 million for the year ending March 2008.
Judging from the trust's initial stable and not terribly exciting assets - City Gas, Singapore's sole retailer of town gas, and SingSpring, its first desalination plant - growth will not be organic.
In its prospectus, CitySpring hints where acquisitions might come from. Its strategy is to invest in infrastructure assets in three sectors - utilities, transport and logistics, and telecommunications - focused in Asia, the Middle East, Australia and New Zealand.
Later, it lists sponsor Temasek's major infrastructure holdings, perhaps hinting at what is to come. Under utilities are Singapore Power, SembCorb Industries and Keppel Corp. Under transport and logistics are PSA International and SMRT Corp. Under telecoms, SingTel and ST Telemedia - which owns Starhub - are noted.
For these firms, CitySpring may prove a convenient vehicle to lighten balance sheets and improve liquidity ratios. Investors in these companies may read the trust's listing as a positive sign.
For CitiSpring itself, the question is how it will fund future acquisitions. According to the preliminary prospectus, only $0.7 million of the proceeds will go towards working capital and establishment costs. Most of the net proceeds will be used to acquire units in and notes of City Gas and SingSpring, the trust's initial assets, with little left over.
Debt financing may cover part of later acquisitions, but it is unclear how high CitySpring's gearing will be after it snaps up City Gas and SingSpring. The trust will acquire 100 per cent of City Gas, which has total assets of $222.2 million and net assets of about $160.9 million, and 70 per cent of SingSpring, which owns total assets of $223.3 million and net assets of $9.1 million.
A check with CitySpring confirmed that the trust's IPO capital is not a war chest to be saved for future purchases and it will depend on secondary rights issues to raise money each time it eyes a new target. This raises a few questions.
First, will IPO investors face the risk of dilution from secondary issues? The risk will be lower if they get preference for future rights issues; but if secondary issues are sold through private placement, dilution is certain.
Second, why has CitySpring chosen to raise only a small amount upfront, instead of raising a large sum of capital at the beginning, and using debt to finance further acquisitions? Backed by Temasek, a triple-A rated investment firm, its cost of debt is likely to be low. If it borrows at a low interest rate to fund a purchase that gives a high yield, the purchase is immediately yield-accretive. Conversely, funding a purchase by raising equity capital - which implies a higher cost of capital as well as incurring fees - may not be so cheap.
The financing decision would be easier to understand if CitySpring did not have any acquisitions on the horizon. But if there are several in the pipeline, why not raise a large sum upfront?
Still, shareholders have the chance to vote on CitySpring's subsequent capital raising measures for particular purchases. As such, retail investors might want to consider if major post-IPO shareholders in CitySpring might vote for decisions that run counter to minorities' interests.
Granted, the trust's performance will depend on the quality of its acquired assets. On that front, given Singapore's stability and relative prosperity, and Temasek's stable of assets, there is little to doubt for now.