Asian Pay Television Trust (APTT) started the institutional bookbuilding yesterday for its initial public offering in Singapore, aiming to raise up to S$1.39 billion ($1.1 billion). The trust will comprise the pay TV and broadband businesses of the Taiwan Broadband Communications group.
On the back of the volatile global markets, yield plays offer investors an attractive option, as was seen in Mapletree Greater China Commercial Trust’s popular $1.3 billion IPO in February. APTT’s offering is one of three separate business trust IPOs eyeing a listing in Singapore at the moment. The other two deals are expected to be smaller, and they are Investec Aviation Trust, an airline leasing business that is sponsored by Investec, and the Croesus Retail Trust, which focuses on shopping malls in Japan and offers an implied yield of 8% for the fiscal year to June 2014.
According to APTT’s current timetable, the pricing is expected on May 16 and the listing is scheduled for May 29. The public offer is set to open on May 17 and continue until May 27. It will be the first business trust in Singapore to focus on media assets.
The decision to list Taiwan Broadband Communications in the form of a Singapore business trust comes on the back of a strategic review by one of its two owners — Singapore-listed Macquarie International Infrastructure Fund (MIIF) — that aimed to generate more value for its own shareholders. The review concluded in December that the most value would be had by divesting existing assets, including its 47.5% stake in Taiwan Broadband Communications, distributing the proceeds and all existing excess cash to MIIF’s shareholders, and winding down the company.
Since then, MIIF and Macquarie Korea Opportunities Fund (MKOF), which owns the rest of the Taiwanese cable TV company, have now settled on a spin-off through an IPO.
In the offering, they will both sell their entire holdings in Taiwan Broadband Communications to the trustee manager of APTT, which is wholly owned by Macquarie, the sponsor.
The deal comprises 1.4368 billion units. The sponsor will take up 3% of that, or 43.1 million units, while the cornerstone tranche consists of 451.1 million units, and 942.6 million units are set aside for the retail and institutional placement portion.
The price range was set between S$0.92 and S$1 each, which translates into a 2014 yield of 8.25% to 8.97%, a source said. That means the total deal size, excluding the sponsor tranche, will be between S$1.28 billion and S$1.39 billion. There is a greenshoe option of an additional 71.84 million units, or 5% of the overall deal size.
The yield range implies a premium to its main comps — Hong Kong-listed HKT Trust has a 2014 yield of 6%, and Singapore-listed StarHub has a 4.4% yield, the source said.
The business trust signed up nine cornerstone investors before the launch: Asian Century Quest Capital, Capital Research and Management, Eastspring Investments, Indus Capital Partners, Lion Global Investors, Signature Global Advisors, the OZ Funds, Quantum Partners and Neuberger Berman.
In a statement published on the Singapore Exchange website on April 4, MIIF said a business trust is the most suitable listing vehicle for businesses such as Taiwan Broadband Communications, which tend to generate stable cash flows in relatively low-risk operating environments. And it added that it views Singapore as a favourable listing destination given its position as “one of the most internationalised exchanges in Asia” when it comes to the domicile of issuers. It is also the regional base for a large number of global funds.
Investors likely find the trust attractive as it is a good quality, very stable business with strong cash flows, the source also noted.
Part of the proceeds from the IPO will be used for the settlement of the aggregate consideration payable to MOKF and MIIF for the acquisition of the assets in the TBC group on the listing date, and for the repayment of debt, according to a preliminary prospectus.
Taiwan Broadband Communications was set up in 1999 and is one of the top-three cable-TV operators in Taiwan. It owns interests in five cable-TV networks that each has a monopoly on providing cable-TV services in their respective regions.
In 2012, the group booked S$308.7 million in revenues, up from S$298.7 million in 2010, according to the preliminary prospectus. It generated asset EBITDA at its operations in Taiwan of S$197.7 million in 2012, up from S$185.3 million in 2010, it says.
J.P. Morgan and Macquarie are joint global coordinators for the IPO, and CIMB and DBS join them as bookrunners.
