IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

RL Commercial REIT / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/rl-commercial-reit" target="_blank" data-smartkarma-citation="entities:33809:1" rel="noopener">RL Commercial REIT (1888938D PM)</a>/RLC REIT is the REIT platform of <a href="https://www.smartkarma.com/entities/robinsons-land-corp" target="_blank" data-smartkarma-citation="entities:8831:1" rel="noopener">Robinsons Land Co (RLC PM)</a>, one of the leading property developers in the Philippines. RLC REIT has set its final offer price at PHP6.45 per unit, which is 12% below the previous maximum price of PHP7.31 per unit.</p><p>The official subscription period will run from 25 August to 3 September. The listing date is set for 14 September. RLC REIT’s listing will be quickly followed by the IPO of <a href="https://www.smartkarma.com/entities/megaworld-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:33806:1" rel="noopener">Megaworld Real Estate Investment Trust (MREIT PM)</a> – <a href="https://www.smartkarma.com/insights/megaworld-reit-mreit-ipo-at-the-front-of-the-back-office" target="_blank" data-smartkarma-citation="insights:55851" rel="noopener">Megaworld REIT (MREIT) IPO: At the Front of the Back Office</a>.</p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/rl-commerical-reit-ipo-initiation-a-big-one" target="_blank" data-smartkarma-citation="insights:56158" rel="noopener">RL Commerical REIT IPO Initiation: A Big One</a>, we noted that RLC REIT has attractive characteristics and will be the largest REIT as measured by market cap, asset size, and geographical spread to be listed on the PSE. Our valuation analysis suggests that the final IPO price is reasonable. </p></div>

RL Commercial REIT (1888938D PM)/RLC REIT is the REIT platform of Robinsons Land Co (RLC PM), one of the leading property developers in the Philippines. RLC REIT has set its final offer price at PHP6.45 per unit, which is 12% below the previous maximum price of PHP7.31 per unit.The official subscription period will run from 25 August to 3 September. The listing date is set for 14 September. RLC REIT’s listing will be quickly followed by the IPO of Megaworld Real Estate Investment Trust (MREIT PM) – Megaworld REIT (MREIT) IPO: At the Front of the Back Office.In RL Commerical REIT IPO Initiation: A Big One, we noted that RLC REIT has attractive characteristics and will be the largest REIT as measured by market cap, asset size, and geographical spread to be listed on the PSE. Our valuation analysis suggests that the final IPO price is reasonable. 

RL Commerical REIT IPO: Valuation Insights

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

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<p>Keppel DC REIT (KDCREIT SP) plans to raise up to US$151m (S$204m) via a mix of a private placement. The company will use the proceeds to fund the recent acquisition of its first China data centre and to pay down debt. </p>
<p>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</p>
<p>We have covered the listing and previous placements for KDC in our earlier notes:</p>
</div><div><ul style="list-style-type: disc;">
<li>Sep 2019 placement for US$273m: <a href="https://www.smartkarma.com/insights/keppel-dc-reit-placement-just-in-time-for-the-index-inclusion" target="_blank" rel="noopener">Keppel DC REIT Placement - Just in Time for the Index Inclusion</a>
</li>
<li>May 2018 placement for US$228m: <a href="https://www.smartkarma.com/insights/keppel-dc-reit-placement-accretive-acquisition-and-probably-expected-dilution" target="_blank" rel="noopener">Keppel DC REIT Placement - Accretive Acquisition and Probably Expected Dilution</a>
</li>
<li>IPO: <a href="https://www.smartkarma.com/insights/first-of-its-kind-exposure-to-rapidly-growing-data-centers" target="_blank" rel="noopener">First of its kind exposure to rapidly growing data centers</a>
</li>
</ul></div>


Keppel DC REIT (KDCREIT SP) plans to raise up to US$151m (S$204m) via a mix of a private placement. The company will use the proceeds to fund the recent acquisition of its first China data centre and to pay down debt. 
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
We have covered the listing and previous placements for KDC in our earlier notes:

Sep 2019 placement for US$273m: Keppel DC REIT Placement - Just in Time for the Index Inclusion

May 2018 placement for US$228m: Keppel DC REIT Placement - Accretive Acquisition and Probably Expected Dilution

IPO: First of its kind exposure to rapidly growing data centers



Keppel DC REIT Placement - Most of the past Deals Have Done Well, Though This Won’t Be Accretive

Event-Driven

<p><a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a>/SPH announced a privatisation offer from <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a>. Keppel is taking private SPH through via a scheme of arrangement. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>, the total consideration is S$2.099 per SPH share, which is a 39.9% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review) and an 11.6% premium to the share price of S$1.88 on 30 July 2021 (last trading day). </p><p>The privatisation proposal is the culmination of the SPH’s strategic review to unlock shareholder value. Keppel's offer was the best offer from several proposals evaluated, according to SPH management. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Post completion of the media business restructuring (requires approval at the EGM in Aug-Sep), SPH would be released from NPPA restrictions including the 5% shareholding cap restriction. Due to the impending lifting of the 5% shareholding cap, the SPH Board's preference was an offer for the whole SPH, to ensure the emergence of a controlling shareholder.</p><div class="content-highlight"><p>The key conditions for the successful privatisation are the completion of the media business restructuring, regulatory approval, SPH and Keppel shareholder approval. The modest premium/discount to historical long-term multiples and share prices is unlikely to excite long-term SPH shareholders. The offer price is largely designed to appeal to SPH shareholders lacking patience for SPH to unlock value through capital recycling (such as a listing of PBSA assets, disposal of investments), a post-COVID-19 recovery particularly in its property businesses and improving earnings quality through diversifying into defensive assets. Overall, while the implied offer price is not a knockout bid, it is ok in the context of our SoTP valuation (post-media business restructuring). </p></div>

Singapore Press Holdings (SPH SP)/SPH announced a privatisation offer from Keppel Corp (KEP SP). Keppel is taking private SPH through via a scheme of arrangement. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of Keppel REIT (KREIT SP) and SPH REIT (SPHREIT SP), the total consideration is S$2.099 per SPH share, which is a 39.9% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review) and an 11.6% premium to the share price of S$1.88 on 30 July 2021 (last trading day). The privatisation proposal is the culmination of the SPH’s strategic review to unlock shareholder value. Keppel's offer was the best offer from several proposals evaluated, according to SPH management. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Post completion of the media business restructuring (requires approval at the EGM in Aug-Sep), SPH would be released from NPPA restrictions including the 5% shareholding cap restriction. Due to the impending lifting of the 5% shareholding cap, the SPH Board's preference was an offer for the whole SPH, to ensure the emergence of a controlling shareholder.The key conditions for the successful privatisation are the completion of the media business restructuring, regulatory approval, SPH and Keppel shareholder approval. The modest premium/discount to historical long-term multiples and share prices is unlikely to excite long-term SPH shareholders. The offer price is largely designed to appeal to SPH shareholders lacking patience for SPH to unlock value through capital recycling (such as a listing of PBSA assets, disposal of investments), a post-COVID-19 recovery particularly in its property businesses and improving earnings quality through diversifying into defensive assets. Overall, while the implied offer price is not a knockout bid, it is ok in the context of our SoTP valuation (post-media business restructuring). 

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>Just under three months ago, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> which is a mini-conglomerate of major Singaporean media interests, an investment fund, and a diverse collection of development and leasing assets in the real estate business, announced that it would restructure, hiving off the media assets into a SPINCO, granting it a pile of cash and assets designed to allow it to work through its problems to stand on its own, then it would be REMAINCO for the real estate and investment assets. This was discussed in <a href="https://www.smartkarma.com/insights/singapore-press-own-time-own-target-restructuring-lor-come-i-clap-for-you" target="_blank" data-smartkarma-citation="insights:51141" rel="noopener"><em>Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You)</em></a>. </p><p>The shares dropped on the announcement because SPH was giving away cash to the media business. It was costing them money to throw it away. At the time, I suggested that the pre-announcement price of S$1.79/share was reasonably full when looking at the future SPH REMAINCO at something like 0.84x Adjusted Post-Deal P/NAV. </p><p>Since then, as real estate in Singapore has rallied, SPH shares have rallied from the low S$1.50s where they fell to Friday's S$1.88/share.</p><h3>The NEW News</h3><p>This morning we get news that after a period of further review, SPH has decided to accept (<a href="https://links.sgx.com/FileOpen/Proposed%20Privatisation%20of%20SPH%20by%20Keppel%20-%20Joint%20Announcement.ashx?App=Announcement&amp;FileID=676909" target="_blank" rel="noopener">announcement</a>, <a href="https://links.sgx.com/FileOpen/Proposed%20Privatisation%20of%20SPH%20by%20Keppel%20-%20Media%20Release.ashx?App=Announcement&amp;FileID=676910" target="_blank" rel="noopener">press release</a>, <a href="https://links.sgx.com/FileOpen/Proposed%20Privatisation%20of%20SPH%20by%20Keppel%20-%20Presentation.ashx?App=Announcement&amp;FileID=676911" target="_blank" rel="noopener">presentation</a>) being taken over by <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> based on a Scheme which will deliver to SPH holders S$0.668 in cash, 0.596 units of Keppel REIT, and 0.782 units of SPH REIT through a distribution of 45.4% of SPH's stake in the REIT.</p><p>Based on the closing prices of 30 July 2021, that would be S$2.099/share or an 11.6% premium to the close. Any dividend that SPH would declare for the fiscal year ending 31 August 2021 would be additive (consensus estimates currently imply ~S$0.02-0.03/share (details in the footnote at the bottom of <a href="https://links.sgx.com/FileOpen/Proposed%20Privatisation%20of%20SPH%20by%20Keppel%20-%20Joint%20Announcement.ashx?App=Announcement&amp;FileID=676909" target="_blank" rel="noopener">p3</a>).</p><p>There are a fair number of conditions. Approval of the Media Business Restructuring at the SPH EGM later this month or September is a <em>sine qua non </em>- if that doesn't pass SPH shareholders, the thing is off. Then there is another EGM at end-Oct early Nov to approve the resulting deal.  </p><p>The CEO of Keppel made a presentation on the deal, and his speech is <a href="https://links.sgx.com/FileOpen/GCAT_Speech%20by%20CEO%20Keppel%20Corporation%20on%20proposed%20acquisition%20of%20SPH%20ex-Media.ashx?App=Announcement&amp;FileID=676925" target="_blank" rel="noopener">here</a>. He clearly says the SPH assets are a good deal for Keppel and go some ways to helping Keppel aim at its Vision 2030 goals through enhancing the value of the SPH assets. I note, however, that SPH shareholders get to sell their shares at below book to receive assets that Keppel is liquidating (and mentioning it as a good thing). </p><div class="content-highlight"><p>SPH holders may be start to ask themselves <em>"Hey Keppel, why you bo jio me?!"</em></p></div><p>There are more complications besides so they are discussed below. </p>

Just under three months ago, Singapore Press Holdings (SPH SP) which is a mini-conglomerate of major Singaporean media interests, an investment fund, and a diverse collection of development and leasing assets in the real estate business, announced that it would restructure, hiving off the media assets into a SPINCO, granting it a pile of cash and assets designed to allow it to work through its problems to stand on its own, then it would be REMAINCO for the real estate and investment assets. This was discussed in Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You). The shares dropped on the announcement because SPH was giving away cash to the media business. It was costing them money to throw it away. At the time, I suggested that the pre-announcement price of S$1.79/share was reasonably full when looking at the future SPH REMAINCO at something like 0.84x Adjusted Post-Deal P/NAV. Since then, as real estate in Singapore has rallied, SPH shares have rallied from the low S$1.50s where they fell to Friday's S$1.88/share.The NEW NewsThis morning we get news that after a period of further review, SPH has decided to accept (announcement, press release, presentation) being taken over by Keppel Corp (KEP SP) based on a Scheme which will deliver to SPH holders S$0.668 in cash, 0.596 units of Keppel REIT, and 0.782 units of SPH REIT through a distribution of 45.4% of SPH's stake in the REIT.Based on the closing prices of 30 July 2021, that would be S$2.099/share or an 11.6% premium to the close. Any dividend that SPH would declare for the fiscal year ending 31 August 2021 would be additive (consensus estimates currently imply ~S$0.02-0.03/share (details in the footnote at the bottom of p3).There are a fair number of conditions. Approval of the Media Business Restructuring at the SPH EGM later this month or September is a sine qua non - if that doesn't pass SPH shareholders, the thing is off. Then there is another EGM at end-Oct early Nov to approve the resulting deal.  The CEO of Keppel made a presentation on the deal, and his speech is here. He clearly says the SPH assets are a good deal for Keppel and go some ways to helping Keppel aim at its Vision 2030 goals through enhancing the value of the SPH assets. I note, however, that SPH shareholders get to sell their shares at below book to receive assets that Keppel is liquidating (and mentioning it as a good thing). SPH holders may be start to ask themselves "Hey Keppel, why you bo jio me?!"There are more complications besides so they are discussed below. 

Alamak! SPH Restructuring Restructured as Keppel Bo Jios SPH Holders

<div><p><a href="https://www.smartkarma.com/entities/filinvest-reit" target="_blank" data-smartkarma-citation="entities:33764:1" rel="noopener">Filinvest Reit (FILRT PM)</a> (FREIT), a subsidiary of Filinvest, aims to raise up to US$240m in its Philippines listing. The REIT is sponsored by <a href="https://www.smartkarma.com/entities/filinvest-land-inc" target="_blank" data-smartkarma-citation="entities:23026:1" rel="noopener">Filinvest Land (FLI PM)</a>. </p></div><div><p>FREIT’s initial property portfolio consists of 16 office towers located in Northgate Cyberzone, Alabang, and one office tower in Cebu City with an aggregate office space GLA of 299,158 sqm and 2,204 sqm of retail GLA. The portfolio will have a weighted average lease expiry (WALE) of 3.8 years with an occupancy of 89.7% as of Mar 2021. The Properties were valued at PHP48,547.4m (US$965m).</p></div><div><p>Given the recent restructuring of the REITs assets, its past financials aren’t of much use. However, looking at the operational data of its existing portfolio, FREIT doesn’t appear to have had a very good FY20 and even FY21 doesn’t appear to be shaping up well.</p></div><div>
<p>We looked at the background of the REIT in our earlier note, <a href="https://www.smartkarma.com/insights/filinvest-reit-ipo-almost-like-a-single-asset-reit-covid-hasn-t-been-kind" target="_blank" rel="noopener">Filinvest REIT IPO - Almost like a single asset REIT, COVID hasn’t been kind</a>.</p>
<p>In this note, we will comment on valuation and run the deal through our ECM framework.</p>
<p><br><br></p>
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Filinvest Reit (FILRT PM) (FREIT), a subsidiary of Filinvest, aims to raise up to US$240m in its Philippines listing. The REIT is sponsored by Filinvest Land (FLI PM). FREIT’s initial property portfolio consists of 16 office towers located in Northgate Cyberzone, Alabang, and one office tower in Cebu City with an aggregate office space GLA of 299,158 sqm and 2,204 sqm of retail GLA. The portfolio will have a weighted average lease expiry (WALE) of 3.8 years with an occupancy of 89.7% as of Mar 2021. The Properties were valued at PHP48,547.4m (US$965m).Given the recent restructuring of the REITs assets, its past financials aren’t of much use. However, looking at the operational data of its existing portfolio, FREIT doesn’t appear to have had a very good FY20 and even FY21 doesn’t appear to be shaping up well.
We looked at the background of the REIT in our earlier note, Filinvest REIT IPO - Almost like a single asset REIT, COVID hasn’t been kind.
In this note, we will comment on valuation and run the deal through our ECM framework.
  


Filinvest REIT IPO - Hard to Get Excited, Despite the Yield

Singapore

Keppel REIT operates as a commercial real estate investment trust. The Trust owns and invests in a portfolio of income-producing office buildings and related real estate assets. Keppel REIT offers its services in Asia and Australia.

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Keppel REIT (KREIT SP)

RL Commerical REIT IPO: Valuation Insights

RLC REIT has set its final offer price at PHP6.45 per unit, which is 12% below the previous maximum price of PHP7.31 per unit. Our valuation...

Arun George

Keppel DC REIT Placement - Most of the past Deals Have Done Well, Though This Won’t Be Accretive

Keppel DC REIT (KDCREIT SP) plans to raise up to US$151m (S$204m) via a mix of a private placement. The company will use the proceeds to fund the...

Sumeet Singh

SPH’s Privatisation by Keppel

SPH announced a privatisation offer from Keppel for a total consideration is S$2.099 per share. While the implied offer price is not a knockout...

Arun George

Alamak! SPH Restructuring Restructured as Keppel Bo Jios SPH Holders

SPH and Keppel have a deal. Keppel will take over SPH post-Media spinoff, paying cash and shares in two REITs. It's a bit cheap, a bit ugly. But...

Travis Lundy

Filinvest REIT IPO - Hard to Get Excited, Despite the Yield

Filinvest Reit (FILRT PM) (FREIT), a subsidiary of Filinvest, aims to raise up to US$240m in its Philippines listing. The REIT is sponsored...

Sumeet Singh

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