SingPost is likely to set a new precedent for the international capital markets next week as the company considers embarking on a full two week global roadshow without setting foot outside of Singapore. In order to combat potential concerns about Sars, the company is said to be planning to conduct all one-on-one presentations via videoconference.
The move should result in huge cost savings from the perspective of roadshow expenses and observers say the only reason it has not been done before is because investors always insist on face-to-face meetings. This time round, however, many companies have internal corporate policies preventing staff from meeting SingPost mangement even if the individual fund manager has no objection.
But in what one observer describes as a kind of "Blitz spirit," most European and US investors have agreed to speak to the company via video conference. "I've never seen fund managers behave in this way before," says one. "There's been a real willingness to compromise and rally round. Both the buyside and sellside desperately want to see deals that work."
In this respect, lead managers DBS and UBS Warburg are likely to be heartened by the recent reception to a $180 million convertible for Taishin Financial Holdings and $300 million bond deal for Bank Mandiri. Both were completed last week, with pricing that benefited from clear markets and pent up demand.
SingPost is likewise said to have received positive feedback from pre-marketing. It also has an extremely straightforward equity story and is consequently considered to be the kind of deal, which can sell itself. As a result, presentations will kick off in Singapore on Tuesday, with everyone confident that final pricing will take place during the middle of the week beginning May 5.
Unlike most Singapore IPO's the deal will be run as a concurrent rather than a sequential offering, meaning that the international bookbuild and retail IPO will open and close at the same time. There are no splits between either tranche, aside from a minimum S$20 million issue size for the public offer, which can be upsized to any amount subject to demand. Daiwa SMBC will also handle a Public Offer Without Listing (POWL) in Japan, a first for Singapore. Again there is no set allocation.
However, while the leads will want to underpin the deal with institutional demand, there is likely to be a strong retail flavour overall because of the appeal of the stock's high dividend yield. This is likely to come out at 7% to 8% based on a pay-out ratio of 75%.
In terms of pricing, investors say initial feedback is suggesting somewhere between the middle to upper end of the S$0.50 to S$0.58 range canvassed over the course of pre-marketing. The company has indicated it is willing to sell between 40% to 60% of its equity through an all secondary share offering and based on an issue price of $0.57 this will net proceeds of S$433 million ($243 million) to S$650 million ($365 million).
The company has 1.9 billion shares outstanding and syndicate banks have put out fair value assumptions of S$1 billion to S$1.2 billion. Alongside the two leads, co-leads are CLSA, Morgan Stanley, OCBC, UOB and Daiwa SMBC.
