Charoen’s F&N to Spin Off Property Unit in Singapore Listing

Fraser & Neave Ltd. (FNN), controlled by Thailand’s richest man, said it plans to spin off its property business from operations including beverages and publishing through a Singapore listing at the end of the year.
The 130-year-old conglomerate will offer to its shareholders two shares of the property company Frasers Centrepoint Ltd. for every F&N stock held, according to a company statement handed out at a Singapore briefing today.
F&N is spinning off a division with S$9 billion ($7 billion) of assets as of June, allowing both companies to focus on their separate expansion strategies. The move follows the S$13.8 billion takeover by Thai billionaire Charoen Sirivadhanabhakdi, whose company will vote in favor of the transaction, according to the statement.
“It’s a good move because historically, there has been a holding company discount on the group because of the combined businesses of property and non-property,” Goh Han Peng, an analyst at DMG & Partners Securities Pte in Singapore, said. “By separating them, the individual businesses can be valued separately and the food and beverage can obtain the full valuation that they deserve.”
F&N shares have fallen 43 percent this year after a one-time distribution to shareholders following the sale of its brewery stake. It last traded at S$5.49 before the trading halt for the announcement.

Independent Strategies

The listing of the property arm is expected in November or December, according to the statement, and the two companies will be traded separately on the Singapore exchange.
“The listing will enhance Frasers Centrepoint’s profile and enable us to pursue our growth strategies independently,” Lim Ee Seng, chief executive officer of Frasers Centrepoint, said in the statement. He said at a press briefing today he expects to work in partnerships with Charoen’s TCC group and is in talks with them and looking at some of their hotels outside of Thailand.
The proposal also allows F&N to focus on its food and beverage business, while enhancing the public image of Frasers Centrepoint, F&N Chief Financial Officer Hui Choon Kit said at a press conference today. He said it’s an appropriate time for the property unit to be separated because of its size.

Hospitality Trust

F&N will be on the look out for acquisitions for food and beverage companies, Hui said.
The property company is also considering plans for a hospitality trust, according to the statement. F&N said earlier this month it’s considering setting up a real estate investment trust made up of its hospitality assets. It has received proposals from investment banks in relation to the IPO, though considerations are at a preliminary stage, F&N said.
Frasers Centrepoint has a S$2.4 billion pipeline of commercial and retail properties as well as S$1.65 billion worth of hospitality assets that could be injected into its property trusts, Lim said, adding that Charoen is keen to build scalable businesses for the group.
Charoen, who acquired F&N through his company Thai Beverage Pcl (THBEV), has a net worth of $7.2 billion, according to the Bloomberg Billionaires Index.
DBS Group Holdings Ltd., United Overseas Bank Ltd. (UOB) and Morgan Stanley are financial advisers for the transaction.