PSA privatization spoils likely to go to 1 of 3 banks

Goldman Sachs, Salomon Smith Barney and UBS Warburg are the hot favourites to act as global co-ordinator in the PSA Corp privatization. The IPO could raise as much as $4 billion.

From an original shortlist of seven, Goldman Sachs, Salomon Smith Barney and UBS Warburg are the frontrunners to be appointed global co-ordinator for the privatization of PSA Corp, the holding company for Port of Singapore Authority, say bankers. It is not yet known whether more than one foreign lead manager will be selected. The decision by Temasek, the Singapore government's investment arm, is likely to be announced tomorrow.

The other overseas banks pitching for the role are Credit Suisse First Boston, Merrill Lynch, Morgan Stanley Dean Witter and Nomura.

Recent reports suggest the initial public offering (IPO) of PSA will take place in October and could raise as much as $4 billion, assuming a valuation of around $10 billion. In 1999, PSA achieved a net profit of S$750 million ($433 million) on revenues of S$2.54 billion. Earnings are expected to top S$850 million this year.

In late 1999, PSA appointed Morgan Stanley Dean Witter to advise it on how to better manage its balance sheet and the port operator has since announced it intends to issue up to S$3 billion in bonds. Morgan Stanly Dean Witter and JP Morgan have been appointed to handle the bond sale, which is due to take place before the end of next month.

PSA's IPO is expected to proceed in the fourth quarter of this year, assuming stockmarket conditions improve. The Singapore government has said it hopes to proceed with the sale before May 2001.

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