Global Telecommunications Infrastructure Trust, the undersea cable unit of Reliance Communications Ltd. (RCOM) seeking to list in Singapore, may offer investors a yield of as much as 11.5 percent, said three people with knowledge of the matter.
GTI Trust will pay a yield of 9.5 percent to 11.5 percent, said the people, who asked not to be identified because the details are private. The business trust, which filed an initial public offering prospectus in Singapore on July 5, is seeking as much as $1 billion in the sale, they said.
The company is offering a higher dividend payout than other business trusts listed in Singapore as it tries to attract investors in the weakest IPO market since 2009. Singapore’s inflation stood at 5 percent in May, while the three-month Singapore Interbank Offered Rate, or Sibor, is at an all-time low at just under 0.4 percent.
“Having such a high yield would certainly make investors take a closer look,” said Wong Sui Jau, general manager of Fundsupermart, the online division of IFAST Financial Pte, which administers S$3.6 billion in assets. “It is certainly one of the highest yields I’ve come across for a prospective IPO. High dividend payouts are something that investors are looking for nowadays because interest rates are low and inflation is relatively high.”
Li Ka-shing’s Hutchison Port Holdings Trust (HPHT), which raised $5.5 billion in a Singapore IPO in March last year, has a yield of 6.4 percent, based on dividends paid in the last year, according to data compiled by Bloomberg. Hutchison Port is down 25 percent since the IPO. Perennial China Retail Trust (PCRT), which raised S$784 million in May last year has a yield of 4.8 percent, after declining 30 percent since its debut.
GTI Trust owns four subsea cable systems that carry Internet traffic and data around the globe. Reliance, controlled by Indian billionaire Anil Ambani, is attempting to sell assets to reduce net debt that stood at 358 billion rupees ($6.5 billion) at the end of March.
“The company is keen to deleverage and is probably offering such high yields to ensure the deal goes through in these markets,” said Vivekanand Subbaraman, an analyst at MF Global Sify Securities India Pvt. in Mumbai. Companies have raised $361 million in IPOs in Singapore so far this year, the lowest since the same period in 2009, Bloomberg data show.
PCCW Ltd. (8), the biggest phone company in Hong Kong, offered a dividend yield of about 9 percent when it sold a telecommunications business trust in the city in November, people familiar with the matter said then. HKT Trust and HKT Ltd., as the company is called, has advanced 37 percent since its debut through July 6, outpacing gains in Hong Kong’s benchmark stock index.
GTI Trust will offer as many as 758 million units at $1.09 to $1.32 apiece, according to two of the people. A Reliance Communications official said he couldn’t immediately comment.
Deutsche Bank AG, DBS Group Holdings Ltd., Industrial & Commercial Bank of China (601398) Ltd. and Standard Chartered Plc are arranging the GTI Trust offering, according to the document.
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