Singapore's largest IPO since 2017 sees muted debut
The NTT DC REIT, which started trading on the Singapore Exchange (SGX) at 2pm on Monday (Jul 14), opened at US$1.02, above its offer price of US$1. During the afternoon, the REIT's share price rose as high as US$1.03, before closing at US$1.
The trust raised a total of US$773 million and is backed by Singapore's sovereign wealth fund GIC and Japan's telecommunications giant NTT Group. It is the biggest listing on the exchange since 2017, when fibre network-centred NetLink NBN Trust raised S$2.3 billion (US$1.8 billion).
NTT Group is the world's third-largest data centre provider through its global data centre business NTT GDC, according to the IPO's prospectus.
Mr Yutaka Torigoe, chief executive officer of the manager of NTT DC REIT, said he was encouraged by the "excellent debut" and said it underscores confidence in the quality of the REIT's portfolio, its growth prospects and the outlook for data centres globally.
However, analysts were less impressed by the trading performance.
"We were hopeful that unit price should hit US$1.10 but the market reaction is much more muted than we anticipated," said Mr Jonathan Koh, a director of research at UOB Kay Hian.
He said investors may be holding back their optimism because of the ongoing trade tensions and threats of higher reciprocal tariffs that have led to business uncertainty.
Mr Oriano Lizza, a sales trader at CMC Markets, described the share price moves as "notably measured rather than exuberant", but said he viewed it positively.
"While the IPO was 4.6 times oversubscribed overall and the public offer was 9.8 times oversubscribed, the tepid price performance actually demonstrates mature investor behaviour," he said.
He said the price action suggests institutional discipline rather than retail speculation, noting that GIC holds a 9.8 per cent stake, and is a long-term holder rather than a short-term trader.
Mr Lizza also pointed to the current interest rate environment being elevated, which traditionally pressures REIT valuations. He added that investors are "appropriately pricing in execution risk" given that the portfolio of NTT DC REIT spans three continents.
"The measured but positive reception demonstrates that Singapore's capital markets are evolving toward greater maturity and sustainability, focusing on long-term value creation – a positive development for the broader market ecosystem," he said.
"BREATH OF FRESH AIR"
Analysts also said that the successful listing of NTT DC REIT holds significance, in particular because of the size of the listing and the business being focused on data centres.
UOB Kay Hian's Mr Koh said the listing signifies a resumption of large-cap companies going public on the SGX. The interest in the listing shows that investors are keen to invest in REITs with a good sponsor and that data centres remain a sought-after asset class, he said.
The IPO raised publicity for Singapore REITs since it was the largest REIT listing on the SGX mainboard in a decade, said Mr Jayden Vantarakis, head of ASEAN equity research at Macquarie Capital.
"As such, NTT DC REIT brings a breath of fresh air to the space," he said.
The listing will likely elevate Singapore REITs and the SGX if it does well, given that there are limited pure data centre-focused REITs in Asia, he added.
Mr Lizza said the listing represents a "watershed moment" for Singapore's capital markets.
"Beyond the impressive scale, this listing strategically positions Singapore as a regional hub for AI-related investment opportunities," he said. NTT DC REIT provides investors direct exposure to critical digital infrastructure that is powering artificial intelligence and cloud computing growth, he said.
SGX Group's head of global sales and origination Pol de Win said the listing taps into the immense growth potential of data centres, which is gaining strong investor interest globally.
"As the first REIT by a global tech powerhouse like NTT, it underscores Singapore's position as Asia's leading REIT hub," he said.
The outlook for the company appears fundamentally positive, Mr Lizza said, pointing to exceptional growth in the global data centre market.
Locally, the government plans to add 300 megawatts of additional capacity, so the structural demand environment is robust, he said.
He also said the IPO sends a "strong positive signal" about renewed confidence in Singapore's capital markets, which the government is trying to revive.
The quality of the transaction demonstrates that Singapore can attract premium international assets, and should give a boost of confidence to other potential SGX listings, said Mr Lizza.
"The combination of government support measures, improved market infrastructure, and this successful large-scale listing creates a more favourable environment for companies considering SGX as their listing destination," he said.
He sees a broad base of potential REIT IPOs on the horizon, including data centre, industrial, logistics, hospitality, commercial and retail assets that could raise between S$600 million to around S$1 billion, he said.
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