Thai Tycoon May Hold Property IPO in Singapore

Fraser & Neave Seeks to Monetize Assets

SINGAPORE—Thai billionaire Charoen Sirivadhanabhakdi is considering a Singapore listing of some of the real-estate assets owned by Fraser & Neave Ltd.,
the conglomerate he bought earlier this year in one of Asia's biggest debt-fueled takeovers.
Fraser & Neave, of which Mr. Charoen owns more than 90%, said in a statement that it is considering an initial public offering of its hospitality assets to monetize their value. It didn't mention the size or timing of the IPO but people with knowledge of the deal said it could raise around US$1 billion and would likely be held early next year.
Separately, Fraser & Neave said it will spin off its property arm, Frasers Centrepoint Ltd., and list it on Singapore Exchange  by the end of this year following a dividend in specie, meaning without conducting any capital-raising.
If he proceeds with the IPO of the hospitality assets, Mr. Charoen will try to capitalize on strong demand for shares in Singapore real-estate trust offerings this year but could also face a more challenging market environment.
Singapore has become a hub for trust listings in Asia, due largely to government rules that require trusts to pay out 90% of revenue in dividends. Singapore-listed REITs have yields of 6%-7%.
Among the big deals, Mapletree Greater China Commercial Trust  raised US$1.3 billion in an IPO of China real-estate assets in March.
Just last month, Singapore-listed property developer Overseas Union Enterprises raised US$476 million in an IPO of hotel and shopping mall assets, and Singapore Press Holdings Pte., the city-state's largest publishing company, raised US$438 million in an offering of its shopping malls. Demand for both offerings easily exceeded the supply of shares.
But global sentiment toward emerging markets has soured in recent months, and many stock markets in Southeast Asia have been hit hard as investors pull their money in anticipation of the U.S. Federal Reserve beginning to wind down its monetary stimulus.
Singapore's benchmark Straits Times Index on Tuesday fell to its lowest level since November.
Two people with knowledge of Mr. Charoen's plans said Fraser & Neave is still choosing which assets it would place in the REIT.
DBS Bank, which was one of the main lenders for Mr. Charoen's acquisition of Fraser & Neave, has been appointed to advise on the REIT IPO, according to people with knowledge of the deal. More banks are likely to be added at a later stage, one of the people said.
Separately, Fraser & Neave confirmed Tuesday that it will spin off its property business, Frasers Centerpoint, following a strategic review of its operations.
The company said it would conduct a dividend in specie, offering current Fraser & Neave shareholders two shares of Frasers Centrepoint for every share of Fraser & Neave they own. It would list Frasers Centrepoint on the Singapore Exchange by end of this year by way of "introduction," which would mean that there will be no fundraising.
Frasers Centrepoint's assets include shopping malls, serviced apartments, residential developments and office blocks in places including China, Australia and Thailand.
DBS Bank, Morgan Stanley  and United Overseas Bank advised Mr. Charoen on separating the property business, people with knowledge of this deal said.
Mr. Charoen started buying up shares in Fraser & Neave, which is more than 130 years old, in July last year, at which time the company also had a brewing business and was selling Tiger beer.
Mr. Charoen's interest in the company prompted Fraser & Neave's Dutch joint-venture partner, Heineken NV,  to bid for the brewing business, which it acquired late last year for US$4.6 billion.
The Thai tycoon then acquired the rest of Fraser & Neave after a months-long takeover battle against Overseas Union Enterprise.
Mr. Charoen's acquisition of Fraser & Neave valued the Singapore company at US$11.2 billion. It was largely paid for with debt.

Source: The Wall Street Journal