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NetLink NBN Trust launches S$2.3b IPO

At S$0.81 per unit, this is at the lower band of its indicative range, and makes the IPO Asia's 2nd biggest this year

The IPO price represents a distribution yield of 5.43 per cent for forecast period of 2018, and 5.73 per cent for the projection year 2019 respectively.


FIBRE network owner NetLink NBN Trust on Monday announced its initial public offering (IPO) price at S$0.81 per unit, confirming market talk that it was going to price its units near the lower band of the indicative range of S$0.80 to S$0.93 each.

The offering price values the market capitalisation of the trust at about S$3.1 billion.

The S$2.3 billion IPO is also the biggest in Singapore since 2011 when Hutchison Port Holdings Trust raised S$7.6 billion, and the second largest IPO in Asia this year after the listing of Netmarble Games Corp in South Korea. The mobile games firm raised 2.66 trillion won (S$3.1 billion) in May this year.

At a media briefing, when asked to explain the pricing, Vijay Vaidyanathan, managing director, head of Southeast Asia global capital markets at Morgan Stanley, said: "We are targeting a positive after-market performance for this transaction."

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Morgan Stanley Asia (Singapore), along with DBS and UBS AG, Singapore Branch, are the joint issue managers and global coordinators for the offering.

The offering units, subject to the over-allotment option, consist of an international placement of 2.71 billion units to institutional and other investors in Singapore, and another offering of 185 million units to the public. The price represents a distribution yield of 5.43 per cent for forecast period 2018, and 5.73 per cent for the projection year 2019 respectively.

Immediately after the offering, Singtel will hold about 24.99 per cent of the units in NetLink NBN Trust, which will own all of the units of NetLink Trust.

In a separate announcement on Monday, Singtel said that the public offering fulfils Singtel's undertaking to the Info-communication Media Development Authority (IMDA) to divest its 100 per cent stake in NetLink Trust to less than 25 per cent before April 22, 2018.

On the listing date, Singtel will sell its stake in NetLink Trust to NetLink NBN Trust, for about S$1.878 billion, comprising a cash consideration of S$1.095 billion and the 24.99-per-cent stake in NetLink NBN Trust.

The 24.99-per-cent stake in NetLink NBN Trust will be held through a wholly-owned subsidiary of Singtel, Singtel Interactive, upon divestment.

Singtel was required to divest at least 75 per cent of NetLink as part of the structural separation requirements for the state-led Next Generation Nationwide Broadband Network (NG-NBN) project. IMDA required operational and structural separation among the passive fibre network infrastructure, the active infrastructure, and the retail service provider layers to promote healthy competition in the retail market.

Singtel said it plans to use the net proceeds from the divestment of its stake in NetLink Trust for debt repayment, re-investments into its existing businesses, acquisitions and other capital management initiatives.

The NetLink Group plays a fundamental role in the delivery of fibre services throughout Singapore. It is the sole appointed network company for Singapore's NG-NBN.

As at end-March this year, the NetLink Group supports about 1.1 million residential end-user connections, equivalent to a penetration rate of about 76 per cent, which it sees room for growth to 100 per cent and above. The company recorded a revenue of S$299.2 million and net profit of S$79.4 million in the financial year ended March 31, 2017.

The public offer opened at 7pm on Monday, and closes at noon on July 17.

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