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CapitaLand rights issue oversubscribed

Anette Jönsson and Daniel Inman Finance Asia
CapitaLand rights issue oversubscribed - Property - Real Estate - UAE - Capital Land - Temasek - Singapore


Temasek takes up its 39.7% entitlement, but CapitaLand completes the deal without calling on underwriters. Meanwhile, Shinhan sets the price for its rights issue at a 25% discount.



Singapore real estate developer CapitaLand said on Friday that its S$1.84 billion ($1.2 billion) rights issue has been oversubscribed based on initial calculations, making it the second Singapore-listed company this year to successfully replenish its equity capital without having to rely on underwriters for support.

The news shows that minority shareholders are willing to increase their exposure at a decent discount to the market price and should be encouraging for other companies that are either already raising money through a rights issue or about to launch do so. Companies from Singapore, Indonesia, Malaysia, Korea and Hong Kong are currently in the market with deals ranging from $300 million (Indonesia's Bank Danamon) to $17.7 billion (HSBC).

CapitaLand's share price stayed well above the rights offer price of S$1.30 throughout the offering period, but did dip below the theoretical ex-rights price of S$2.01, reaching a low of S$1.79 on March 9. When the subscription period ended on March 12, the share price had recovered to S$1.96.

When the rights issue was first announced on February 9, the company's shares were trading at A$2.36, which meant the offer price implied a 45% discount to the market price -- a discount that narrowed to 34% during the subscription period.

CapitaLand provided no further details about the size of the oversubscription, but said the amount included both acceptances to the base offer and applications for excess shares on top of the pro-rata entitlements. The company is expected to make a more detailed announcement early this week.

The real estate developer offered shareholders the option of buying one new share for every two existing ones at a 35% discount to the theoretical ex-rights price of S$2.01 and a 54% discount to the post-rights issue net tangible asset value of S$2.80. Temasek, which is the largest shareholder in CapitaLand with a 39.7% stake, had committed to buy its pro-rata shares, while the rest of the deal was underwritten by the three bookrunners, namely DBS, J.P. Morgan and Merrill Lynch.

According to group CEO and president, Liew Mun Leong, CapitaLand is raising money to strengthen its balance sheet and thereby enhance its financial flexibility, making it well-positioned for any mergers and acquisitions opportunities that might arise. The group's core businesses span residential developments, retail malls, commercial, serviced residences, integrated developments and real estate financial services.

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