Wednesday, September 29, 2010

IPO of GIC Fund

Mr. Tan,
I found the prospectus of the IPO document in MAS Opera.  I will not be commenting on it as I don't have the stamina to go through the 540 page doc.  Looks like it is primarily China and Japan properties.  GIC supposedly said that they are positive properties so I am not sure why they sell the portfolio.  Maybe they have better use of the funds? By the way, it is not a REIT structure.  Dividend payment at managers discretion.  My hunch is that GIC is looking to make management fees from other than the Singapore Government.


yujuan said...

Ask ourselves if the prospects are so good why GIC is divesting.
Also consider risk of the properties geographically confined on two countries only.
Societies come in circles, now communism is out of favour, with show of the extreme right nationalism and chauvisim in China,
what would happen to these properties should China revert back to the Extreme left form of Maoist Communism.
Good only for a smaller safer, shorter time-frame investment amount, or for flipping for a profit should IPO opens above selling price.

C H Yak said...

Wow, the IPO prospectus is too long to digest. Anyway I note the following :-
(a) 80% of properties in Japan.

(b) 20% in China (majority in Suzhou and Shanghai)

(c) Capital intensive and income returns should be more from rentals.

(d) the declared dilution is 29.2%. Worst scenario after IPO share is a consolidation in price by this much. (confirms what the anaylst advised - not good to take up IPO in bullist market. Unless I see the S'pore STI breaching 2300 and shooting up to 3000 soon , then perhaps) ... and now with Euro-zone giving bad news although US & China offering some sparks ... I still remain cautious.

(e) EPS abt 18 cts ... so PE about 10...If take 10 years to recoup ... rather long-term investment. We should note the explosure to Japanese property mkt and the uniqueness of their property mkt...took 14 years to recover with bubble resulting much within commercial properties...and nearly dragged down their whole banking system.

(f) H/E there is no declared dividend policy. It is not positive to just rely on rental returns. Perhaps I would prefer the explosure to be at least 50:50 on China mkt. The China bubble is more contained within the resi sector...and both domestic demand & export will push up demand for logistic properties...So I do not foresee good dividends in the near future.

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