Sexy or not, Singapore's biggest initial public offering (IPO) in six years has made quite an impact, receiving twice as many subscriptions as it could offer.
But animal spirits that might have sent the counter soaring were not out in force on its market debut yesterday. Units of NetLink NBN Trust traded flat.
Units in the business trust, which owns fibre optic cable across the island, opened at 81.5 Singapore cents when trading commenced at 3pm yesterday. This was just a whisper above its offer price of 81 cents.
Over two hours of trading, the units briefly touched a low of 80.5 cents before closing flat at 81 cents. A total of 184.4 million units changed hands, making NetLink NBN Trust the second most active counter yesterday.
Given NetLink's massive offer size of $2.3 billion, a price jump on Day One was unlikely since it would take tremendous demand to outstrip the large supply of shares. The pricing appears to have been fairly close to spot on.
The sober market reception also reflects NetLink's positioning as a yield play - more of a "widows and orphans stock" than one for the punters.
The IPO was two times subscribed with $4.7 billion worth of subscriptions received. It comprised a public offer of 185 million units, and an international placement tranche of 2.7 billion units. About half the public tranche went to small investors who applied for fewer than 100,000 shares with a success rate of at least seven in 10.
NetLink NBN Trust's IPO is the biggest here since Hutchison Port Holdings Trust raised US$5.5 billion in 2011. It is also Asia's second largest this year, after South Korean mobile-games maker Netmarble Games, which raised US$2.3 billion (S$3.2 billion) in April.
Based on a price of 81 Singapore cents a unit, IPO investors can expect an annualised dividend yield of 5.43 per cent for the period to March 31 next year, and a 5.73 per cent yield the year after that.
NetLink NBN Trust's market capitalisation at closing was about $3.1 billion.
Singtel, which was forced to sell its NetLink stake under rules laid down by the infocomm regulator, retains 24.99 per cent of the trust. Singtel shares rose two cents or 0.51 per cent to $3.92 yesterday.
