SingTel set to launch SingPost IPO Monday: Sources
SingTel set to launch SingPost IPO Monday: Sources
Dow Jones Singapore
Singapore Telecommunications Ltd. will on Monday launch the initial public offering (IPO) for its postal arm, a move that will help Southeast Asia's largest phone company cut its S$10 billion debt, sources said on Sunday.
Singapore Post Ltd.'s share sale would be Asia's biggest IPO this year and could be attractive to investors looking for steady yields in a turbulent market.
SingTel is likely to set a ceiling price for SingPost of around S$0.57 or S$0.58 a share, which would value the postal company around S$1.1 billion, or 11 times earnings.
"There's no need for telecom companies to have postal companies anymore. It's good for SingTel to do the IPO to help them reduce debt," said Tien Xuan Doe, an analyst at Morley Fund Management, which manages US$2.6 billion in funds in Asia.
While it isn't known yet how much of its postal unit SingTel intends to sell, sources say SingTel could sell anywhere between 30 percent and 60 percent of SingPost, which would raise between S$331 million and S$661 million in gross proceeds.
The final price will be set once the offer closes, and any difference between that and the ceiling price will be refunded to investors, according to preliminary filings by SingPost.
The proceeds from the offer will be used to reduce some of the debt SingTel has amassed in recent years through acquisitions in the Asia-Pacific region, including the high-profile acquisition of Optus, Australia's second-biggest telecom operator.
The expected launch comes after UBS Warburg and DBS Bank Ltd., who are managing the share sale, submitted preliminary filings for the offer at the end of last month.
Roadshows are expected to kick off shortly, after which it is hoped SingPost will be listed on the mainboard of the Singapore Exchange around the end of April, sources said.
SingPost has been busy paving the way for the share offer in recent weeks, including raising funds through a bond sale, and is also waiting for the industry regulator to approve the raising of postal tariffs for the first time in eight years.
SingPost has 63 post offices around the island of 4 million people, and has delivered steady earnings of around S$100 million over the past three years.
"SingPost is a stable business. As long as they pay a good dividend I don't see why it won't be a good IPO," Doe said.
Investors will be offered a volume discount, although details such as how much an investor needs to buy and how big the discount will be have yet to be determined.