by Ernie B. Calucag
A property developer and a hotel operator launched separate initial public offerings (IPOs) Thursday, both looking to tap into the recovering equities market in Singapore.
Singaporean property developer Starland Holdings Limited priced its IPO at S$0.22 per share that will help the firm raise S$4.9 million.
Starland will list 22.2 million new shares in the Catalist board of Singapore Exchange, which represents about 15.3 per cent of its post-placement share capital of 144,733,000 shares.
At the IPO price of S$0.22, it is priced at a historical price to earnings ratio of approximately 14.2 times. The placement price also represents a discount of approximately 47.9 per cent over the adjusted NAV (net asset value) per share.
Starland plans to use the net proceeds of approximately S$3.1 million to acquire and build up its landbank for future development as well as for general working capital.
The group develops properties in China, particularly in the province of Chongqing. Starland said the demand for homes there is growing at a steady pace, especially from first time buyers and upgraders due to a rapid urbanisation rate.
Chongqing is one of China’s fastest growing economies. From 2004 to 2010, Chongqing’s GDP output grew at a compounded rate of 17.3 per cent annually. Its per capita disposable income grew at a CAGR of 12.9 per cent, and foreign direct investments grew at a CAGR of 58.5 per cent.
Starland believes that it is timely for investors to participate in its IPO, as they are coming into the group at the start of its growth path.
“With the IPO, Starland will also be able to leverage on the status as a public listed company to help boost its brand in China, which will help us facilitate business needs such as acquiring more land,” it said in a statement.
For the financial year ending 30 September 2011, Starland’s revenue reached RMB77.7 million (S$15.36 million) with a net profit of RMB9.3 million. In terms of financial position as at 30 September 2011, the group’s cash and bank balances stood at RMB11.7 million, with zero gearing.
The valuation of the group’s land bank for future developments is 3.8 times the cost of the land, which amounted to RMB339.1 million compared to the land cost of RMB87.5 million.
Starland’s placement will close at 12.00 noon on 25 April 2012 and trading of shares is expected to commence on April 27.
PrimePartners Corporate Finance is the manager, sponsor and placement agent of the IPO.
GPH to Raise S$117 million in IPO
Meanwhile, Global Premium Hotels Limited (GPH), the hotel and hospitality unit of Fragrance Group, priced its 450 million new shares at S$0.26 apiece, with an over-allotment option of 67.5 million shares.
GPH wants to raise S$117.0 million from its IPO to fund the acquisition of Fragrance Group’s hotel portfolio. Fragrance will retain majority ownership of GPH.
The group said it is confident Singapore’s integrated resorts and more frequent flights by budget carriers into the country will support its expansion plans.
“This IPO or restructuring exercise will streamline the group’s portfolio – one will be property development and the other, hotel development and operations,” said Eddie Lim Chee Chong, CEO of Global Premium Hotels Limited.
“This will give investors a clear choice of what they want to invest in – the hospitality industry or another property counter. With this, we are able to focus on both businesses – property development, and hotel development and operations,” he added.
The group owns 22 economy and mid-tier hotels in Singapore worth over S$747.5 million.
GPH’s public offer will close on April 24 and is expected to begin trading on April 26.
OCBC is the issue manager, underwriter and placement agent of the IPO.
Starland and Global Premium Hotels’ offerings will be the fourth and fifth IPOs in Singapore so far this year after the listings of blood bank group Cordlife, palm oil firm Bumitama and engineering firm Civmec.
Some other groups have been tipped to launch IPOs in Singapore. The list includes English football champions Manchester United, India’s Reliance Communications, Finnish equipment group Cargotec and motor racing group Formula One.