GIC starts talks with investors for $3 bn IPO

The Government of Singapore Investment Corp started talks with potential corporate investors for the $3 billion initial public offering of its logistics unit.

GIC has identified about 50 so-called cornerstone investors including real estate and hedge funds, and some international wealthy individuals, sources said. The warehouse unit, called Global Logistic Properties, started pre-marketing the sale to analysts in Singapore and Hong Kong today and is expected to start trading in Singapore on October 15.

The IPO may raise as much as $3 billion, sources said, making it the city-state’s biggest first-time sale since Singapore Telecommunications Ltd’s initial offering in 1993. GIC, manager of more than $100 billion of Singapore’s foreign exchange reserves, bought the assets from ProLogis, the world’s largest owner of warehouses, for $1.3 billion in December 2008.

“Increasing the comfort level of investors with strong cornerstones is key, particularly when the assets are all located outside of the listing country,” said Janice Ding, a Singapore-based analyst at CIMB Research Pte.

Cornerstone investors are guaranteed shares in IPOs in exchange for a pledge to hold the stock for a certain period of time. Companies use the cachet of the investors, who may be institutions, companies or billionaires, to drum up interest in their offerings among other potential buyers.

Jennifer Lewis, a spokeswoman for GIC, didn’t immediately return calls seeking comment.

Policy risks
Global Logistic operates in 25 markets in Asia outside Singapore, according to its website. In China, the company manages 51 logistics parks in 18 cities, totalling 4.4 million square metres at the end of June. It runs 69 logistics facilities in seven cities in Japan.

“Investors are likely to be more demanding on pricing as the Japanese logistics market is highly competitive and the Chinese industrial market carries relatively high policy risks,” said Ding.