Hutchison ports unit prices $5.4 billion Singapore IPO: sources

HONG KONG/SINGAPORE Fri Mar 11, 2011 2:48am GMT

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HONG KONG/SINGAPORE (Reuters)- Hong Kong billionaire Li Ka-Shing's Hutchison Port Holdings Trust (HPHT) will raise $5.4 billion via a Singapore IPO after pricing its shares at the middle of an indicative range, in what will be Southeast Asia's largest-ever share offer.

The HPHT IPO, also set to be the largest in Asia so far this year, is a major boost for the Singapore Exchange (SGXL.SI), which has fallen well behind rival Hong Kong in recent years in attracting scores of multi-billion-dollar listings.

Li, Hong Kong's richest tycoon, chose Singapore because of more favorable tax treatment for trust-like structures that pay investors regular dividends.

"This will be a significant boost to Singapore's efforts to compete with the likes of Hong Kong and Shanghai as a leading financial center in Asia," said Jake Robson, a partner at law firm Norton Rose in Singapore who specializes in equity capital markets.

The HPHT listing is the first large-scale launch of a business trust by a non-Singaporean business and the amount of money that will come in will exceed the total raised in Singapore for the whole of last year, he added.

Sources with the knowledge of the deal told Reuters that HPHT priced the offering at $1.01 per unit, in the middle of a$0.99-$1.03 per unit range after guidance was tightened on Thursday.

The sources declined to be identified, while the company and banks involved in the deal were not available to comment.

The IPO was previously expected to raise $5.8 billion on an initial price guidance of $0.91 to $1.08 a unit.

"The price probably reflects the greater volatility and uncertainty in the markets. It's a very large IPO so to get it at the high end of the price range would have been tough," said Kevin Scully, managing director at NRA Capital.

"Even at $1.01, the yield is quite attractive for medium-term investors as long as China and Asian economies remain buoyant," he added.

The trust is expected to yield around 5.9 percent, based on the $1.01 price. This compares with a yield of around 7 percent offered by many Singapore-listed business and property trusts.

The size of the HPHT offering exceeds Petronas Chemicals' (PCGB.KL) $4.1 billion fund raising last year, which was the biggest IPO in Southeast Asia at that time.

HPHT, a unit of Li's Hutchison Whampoa (0013.HK) that owns and operates ports in Shenzhen and Hong Kong, is aiming to cash in on a recovery in global trade and provide investors with access to China's booming infrastructure business.

The listing is positive for SGX, which is currently in a bid to merge with the Australian Stock Exchange (ASX.AX) in $7.7 billion deal, as it could potentially attract more business trusts and ports-related entities to list in the city-state, Credit Suisse head of Singapore research Sean Quek said.

The IPO has attracted big names including Singapore state investor Temasek Holdings TEM.UL, U.S. hedge fund manager Paulson & Co and Cathay Life Insurance as cornerstone investors, according to a draft prospectus.

The continued strong interest in HPHT contrasts with the diminishing appetite for new issues, which has delayed a planned S$1.1 billion Singapore IPO by Perennial China Retail Trust, a trust managed by former CapitaLand (CATL.SI) shopping mall chief Pua Seck Guan.

DBS (DBSM.SI), Deutsche Bank (DBKGn.DE) and Goldman Sachs (GS.N) are joint bookrunners and issue managers for the offering. JPMorgan (JPM.N), UBS (UBSN.VX), Barclays (BARC.L), Morgan Stanley (MS.N) are among co-lead managers.

(Reporting by Fiona Lau and Saeed Azhar, additional reporting by Charmian Kok, Harry Suhartono and Rachel Armstrong; Editing by Dhara Ranasinghe)

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