Biggest IPO in six years, NetLink debuts on SGX

SINGAPORE — NetLink NBN Trust debuted on the mainboard of the Singapore Exchange (SGX) at 3pm on Wednesday (July 19), and saw support from yield-hungry investors to close the day’s session as one of the top volume traded stocks.

The stock opened at the offer price of 81 Singapore cents, before rising almost immediately to 81.5 Singapore cents, but it barely held its ground for a few minutes before returning back to the opening price.

It continued to hover between 81 and 80.5 Singapore cents before closing the day’s trading flat at 81 Singapore cents.

The company, which owns the fibre network that is the foundation of Singapore’s next generation nationwide broadband network, is the broadband unit of telecom company Singtel. The initial public offering (IPO) was two times subscribed with S$4.7 billion worth of subscriptions received, said the company.

NetLink’s IPO is the largest here since Hutchison Port Holdings Trust raised US$5.5 billion (S$7.6 billion) in March 2011.

Singtel owns 24.99 per cent of NetLink after the IPO. Based on the offer price, investors can expect projected annualised distribution yield of 5.43 per cent for 2018 and 5.73 per cent for 2019.

Analysts cited the steady price and good volume attributable to the stock being primarily an appeal to long-term income investors looking for a stable dividend.

“Notably, NetLink had already been priced on the lower end of its marketing range and the lack of movement may (also) be the market waiting for dust to settle on this highly watched IPO,” suggested IG market strategist Pan Jingyi.

As for the Republic’s local bourse — which had seen a lack of listings in recent years — the addition of NetLink’s S$2.3 billion IPO certainly adds to market depth and could provide additional liquidity to the market, Ms Pan added.

Ms Margaret Yang, market analyst at CMC Markets Singapore said: “As Global Logistic Properties (GLP) has recently received a privatisation offer and might exit the SGX soon, the market needs fresh blood to boost liquidity and keep investors engaged.”

The SGX welcomed NetLink to the mainboard on Wednesday, adding that the group is the largest fibre network infrastructure trust to list on SGX to date.

Mr Loh Boon Chye, chief executive of SGX said: “With a market capitalisation of nearly S$3.2 billion, NetLink NBN Trust’s listing will boost SGX’s real estate investment trusts and business trust cluster to a total of 50 listings, and bring the combined market capitalisation close to S$100 billion.”

Going forward, analysts are bullish about the SGX’s performance amid the improved economic situation, and some expect to see more sizeable IPOs come up in the second half of the year.

“Despite the 15 per cent gains in the Straits Times Index this year, we still remain positive on the outlook. Equities have had a very good first half in 2017 and that has helped lift sentiments and valuations. Companies seeking to raise funds will take advantage of the better valuations to list,” said Mr Joel Ng, head of research at KGI Securities (Singapore).

“We could see renewed interest among property developers after the privatisation of GLP, as well as laggard stocks that have not really caught up with gains in the broader market,” Mr Ng added.