Hutchison Port Holdings Trust

[freedom]

Singapore got Trust incentives, no tax on trust income.

don't think HK has the same.

[mrEngineer]

If HPH management is going to be listed someday, we might see ARA history repeating itself. Haha

[Musicwhiz]

Hmm, it's a very "big deal".

Business Times - 19 Jan 2011

US$6b Hutchison port IPO to berth at S'pore

Outfit controlled by Li Ka-shing plans mega SGX listing that could dwarf even SingTel's '93 debut

By JOYCE HOOI

(SINGAPORE) In what could trump SingTel's record-setting initial public offering (IPO), Hong Kong-listed Hutchison Whampoa announced yesterday that it plans to spin off its port assets in Hong Kong and China into a separate listing on the Singapore Exchange (SGX).

According to reports, the listing of Hutchison Port Holdings Trust (HPH Trust) aims to raise as much as US$6 billion. This is more than the entire amount raised on the SGX in 2009 - S$3.1 billion.

Hutchison Whampoa - the biggest container terminal operator in the world - is controlled by billionaire Li Ka-shing.

If the IPO goes through, it will dethrone SingTel's 1993 IPO, which raised about S$4 billion, in the proceeds stakes.

The trust will operate and develop deep-water container ports in Guangdong, Hong Kong and Macau.

Its portfolio will encompass Hutchison Whampoa's entire interests in its subsidiaries which include Hongkong International Terminals (HIT) - the owner and operator of Terminals 4, 6, 7 and two berths in Terminal 9 at Kwai Tsing in Hong Kong - as well as Cosco-HIT, the owner and operator of Terminal 8 East, also at Kwai Tsing.

In 2005, PSA International bought a 20 per cent stake in both HIT and Cosco-HIT for US$925 million in cash, as part of its strategy to gain a foothold in Hong Kong.

While HPH Trust's IPO might be Singapore's largest if the US$6 billion figure is borne out, the Hutchison ports business represented a superlative of another kind for Singapore in 2006.

That year, PSA International made what was its biggest ever investment - paying US$4.4 billion for one-fifth of Hutchison Whampoa's port network, which made it a holder of substantial minority interest.

'PSA International is in full support of the establishment of this new entity and its proposed public listing,' said Fock Siew Wah, group chairman of PSA International.

'It believes that the listing of the HPH Trust will best meet the growing needs of Hutchison Port Holdings' global port operations and satisfy, at the same time, the needs of the international institutional investors and the general investing public for good investment grade business trust stocks.'

Coincidentally, PSA group chief executive Eddie Teh - whom BT learned yesterday is due to retire in August - was formerly an executive with Hutchison.

For Hutchison Whampoa, this spin-off and listing will make sense.

'It's capitalising future gains and selling them to the market,' said Roger Tan, vice president of SIAS Research.

A formal application to spin off the trust was made to the Hong Kong Stock Exchange last Friday. The Hong Kong bourse's policy of allowing only real-estate investment trusts to list might have propelled HPH Trust into seeking a listing on the SGX, which does not have a similar restriction.

Speaking to the media and analysts at the SGX's Q2 earnings briefing yesterday, the exchange's chief executive officer, Magnus Bocker, declined to comment on whether competition for the listing had been great amongst exchanges. 'We are very proud that they have made the choice to come to Singapore,' said Mr Bocker.

According to the Wall Street Journal, people close to the deal said that the IPO could be launched either in late-February or early-March if it gets all the necessary approvals. Other estimates have pegged the launch date closer to the end of March or early-April.

If the deal goes through, Hutchison Whampoa will hold 25 per cent of the trust's units.

Others, however, have expressed scepticism at the reported aim of raising US$6 billion in IPO proceeds in a market like Singapore's.

'How much did SingTel raise?' one industry analyst asked incredulously when asked about the possibility of drawing US$6 billion from the IPO. 'I'm not sure there will be enough subscriptions to soak up such a large issue. It would depend on how much is floated.'

[freedom]

If HPH management is going to be listed someday, we might see ARA history repeating itself. Haha

why would Li ka-Sing want to list his real cash cow?....

ports are assets only, the human running it is the most valuable asset.

---

a few reasons I think Why list it now:

1. China is cooling its economy, which means, less export, less sea transport, less port usage.

2. sino-SEA rail. for years, fleet on China-MiddleEast-Europe route hates to use the infamous the strait of Malacca. now with sino-SEA rail, cargos from China can go staight to india ocean already avoiding use of Malacca Strait.

[axt]

If HPH management is going to be listed someday, we might see ARA history repeating itself. Haha

why would Li ka-Sing want to list his real cash cow?....

ports are assets only, the human running it is the most valuable asset.

---

a few reasons I think Why list it now:

1. China is cooling its economy, which means, less export, less sea transport, less port usage.

2. sino-SEA rail. for years, fleet on China-MiddleEast-Europe route hates to use the infamous the strait of Malacca. now with sino-SEA rail, cargos from China can go staight to india ocean already avoiding use of Malacca Strait.

My guess is a trust usually mean immediate money for expansion so why not and in the form of a trust, he might have some tax breaks etc that will be helpful going forward.

[thefarside]

There's a lot of cash sloshing around in Singapore at the moment. A sink for US$6 billion might be what MAS needs.

A business trust is probably organised differently from a REIT? Perhaps experts could comment a bit more. As an aside, taking these assets out of the Hutchison group and packaging them as steady income instruments may realise more value (from a financial engineering perspective) for CK rather than letting them stay within the parent and be valued together with the rest of the business as a group. The marketing of such instruments would emphasise on steady distributions and yields, and considering the low interest rates globally now, would mean a high valuation multiple being achievable, market conditions permitting.

They probably stand to make a lot of $$$ from this; release capital locked up in the business, offload all the debt to the trust, and still cream off a substantial amount from managing it before taking another chunk of distributions from their remaining equity, tax free. Good deal I think, for Cheung Kong.

[Contrarian]

> They probably stand to make a lot of $$$ from this; release capital locked up in the business,
> offload all the debt to the trust, and still cream off a substantial amount from managing it before
> taking another chunk of distributions from their remaining equity, tax free. Good deal I think, for
> Cheung Kong

Exactly. Not so good deal for retail investors.

The operation of a business trust is similar to that of a REIT. Get maximum utilisation and rental rates, pay out dividends. The trust manager earn the fat fees. And they will keep growing the assets to collect more $$$. Bad time, raise rights issue.

But always, there will be people who buy becoz of CHEUNG KUNG... :-)

[Musicwhiz]

Business Times - 20 Jan 2011

Hutchison's US$6b IPO will liven up the party

Move might be the shot in the arm the trust scene needs

By JOYCE HOOI

(SINGAPORE) Hutchison Whampoa's move to list its port assets as a trust here - in an initial public offering (IPO) that might raise US$6 billion - might be the shot in the arm that the staid trust scene needs.

'We feel that the issue will breathe new life into SGX-listed business trusts in general, particularly infrastructure trusts,' a Kim Eng Research note on the matter said yesterday.

The maritime trust sector could also see some renewed interest. There are currently three shipping trusts listed here.

'Given the expected size of the IPO and the background of the issuer, we believe this listing will raise the profile of Singapore as a key maritime centre in Asia as well as a growing preferred exchange for a wide range of transportation, logistics and warehousing companies,' said Philip Clausius, CEO of First Ship Lease Trust Management.

As speculation ensued about the IPO that could dwarf SingTel's S$4 billion IPO in 1993, Kim Eng said that its preliminary calculation indicated that the port trust could be listed at a price-to-book ratio of between 1.3 and 1.5, with a potential yield of around 6 per cent.

In the face of some scepticism over the sheer magnitude of the US$6 billion figure, sources close to the deal have pointed out that Global Logistic Properties, which raised S$3.9 billion last year, was 12 times subscribed, indicating that there was enough liquidity in the market for something of this size.

Kim Eng's projected yield will put the port trust roughly in the same league as some of its future peers on the exchange.

'K-Green Trust and Macquarie International Infrastructure trust have been relative laggards, trading at or below their book values, despite attractive yields of between 5.1-7.4 per cent,' the report said.

Business trusts are different animals from companies that simply list themselves. The trusts are structured so that the company is allowed to distribute dividends out of its operating cash flow instead of from its accounting profits, essentially allowing unitholders to tap straight into the cash pipeline.

When Hutchison Whampoa announced the spin-off and listing decision on Tuesday, it noted that the Hong Kong exchange - where it is listed - did not have rules or regulations allowing securities to be listed as units.

Singapore, however, does. Trusts that list here have a raft of perks - stamp duty is waived for shipping trusts and real estate investment trusts.

While it is not clear if a port trust would fall under the same category, ship or container leasing trusts in Singapore enjoy tax concessions for up to five years on their qualifying leasing income under the Maritime Finance Incentive scheme.

Some trusts, however, plagued by low trading volumes, have not ridden off into the sunset.

'Hyflux Water Trust (HWT) was recently delisted in December, after it was bought out by a private investor at a valuation of 1.1x; prior to this, HWT was languishing at market valuations of around just 0.9x (price-to-book ratio),' the Kim Eng report noted.

[Nick]

Who to blame for port move?

Mary Ma
Thursday, January 20, 2011

http://www.thestandard.com.hk/news_detai...10120&fc=4

A HK perspective on the listing move. They appear to be in shock !

[mikh]

Exactly. Not so good deal for retail investors.

The operation of a business trust is similar to that of a REIT. Get maximum utilisation and rental rates, pay out dividends. The trust manager earn the fat fees. And they will keep growing the assets to collect more $$$. Bad time, raise rights issue.

But always, there will be people who buy becoz of CHEUNG KUNG... :-)

Superman has listed many companies in HK. One measure of whether HPHT potentially offers a good buy is in the historical performance of the majority parent. See if it considers the interests of the minority investors after listings, and the company's subsequent performance. In Sg, I believe Suntec Reit has not done too badly?