Singapore's love affair with trust listings looks almost worn out. Companies which promise to pay out a majority of their income to shareholders have dominated the city-state's initial public offerings in recent years. Yet, the prospect of rising interest rates and the poor performance of past listings make it harder to win support for yield stocks.
Real estate investment trusts (REITs) and business trusts have long been popular with Singapore's conservative and income-hungry investors. Almost all the listings of a significant size launched in the city in the past three years have fallen into one of those two categories. Singapore's exchange now counts 43 listed business trusts and REITs with a combined value of $45 billion - equivalent to eight per cent of the stock market's total capitalisation. Hong Kong tycoon Li Ka-shing's $5.45 billion offering of Hutchison Port Holdings Trust remains the city's largest-ever IPO.
The prospect of future increases in interest rates undermines the attractions of a steady stream of dividend income. Last month, South Korea's Lotte Shopping ditched plans for its Singapore trust after failing to attract enough support. It's also unclear whether a planned $479 million offering by Frasers Centrepoint, a property group controlled by Thai tycoon Charoen Sirivadhanabhakdi, will go ahead.
The lackluster performance by recent issues has also made investors more cautious. Nine of the ten largest trusts listed in the past year are trading below their issue price and have also lagged the benchmark FTSE Straits Times Index over the same period. Bankers blame a mixture of subscale assets as well as weak regulation governing business trusts.
The pending offering of PACC Offshore Services Holding, which operates a fleet serving offshore oilfields and is seeking to raise $380 million, is likely to be only the third IPO in Singapore this year. The rest of the pipeline is dominated by Indian companies such as Larsen & Toubro, which is testing appetite for a listing of its toll road assets. Yet a post-election rally may make the Indian stock market look relatively more attractive. As trusts lose their shine, Singapore's IPO prospects are looking increasingly bleak.
Real estate investment trusts (REITs) and business trusts have long been popular with Singapore's conservative and income-hungry investors. Almost all the listings of a significant size launched in the city in the past three years have fallen into one of those two categories. Singapore's exchange now counts 43 listed business trusts and REITs with a combined value of $45 billion - equivalent to eight per cent of the stock market's total capitalisation. Hong Kong tycoon Li Ka-shing's $5.45 billion offering of Hutchison Port Holdings Trust remains the city's largest-ever IPO.
The prospect of future increases in interest rates undermines the attractions of a steady stream of dividend income. Last month, South Korea's Lotte Shopping ditched plans for its Singapore trust after failing to attract enough support. It's also unclear whether a planned $479 million offering by Frasers Centrepoint, a property group controlled by Thai tycoon Charoen Sirivadhanabhakdi, will go ahead.
The lackluster performance by recent issues has also made investors more cautious. Nine of the ten largest trusts listed in the past year are trading below their issue price and have also lagged the benchmark FTSE Straits Times Index over the same period. Bankers blame a mixture of subscale assets as well as weak regulation governing business trusts.
The pending offering of PACC Offshore Services Holding, which operates a fleet serving offshore oilfields and is seeking to raise $380 million, is likely to be only the third IPO in Singapore this year. The rest of the pipeline is dominated by Indian companies such as Larsen & Toubro, which is testing appetite for a listing of its toll road assets. Yet a post-election rally may make the Indian stock market look relatively more attractive. As trusts lose their shine, Singapore's IPO prospects are looking increasingly bleak.