Singapore IPO revival hopes pick up with NTT's REIT debut gains
(Bloomberg) — Singapore's biggest initial public offering (IPO) in eight years is offering hope that the country's stock exchange is finally attractive for new listings.
NTT DC REIT gained as much as 3 per cent on Monday in its trading debut, outpacing the benchmark Straits Times Index. This comes after it secured the city-state's sovereign wealth fund as a rare cornerstone investor.
The US$773 million data centre listing is being closely watched as the spark that could revive Singapore's moribund IPO scene, following an all-hands-on-deck effort to reboot it. There was a palpable sense of relief among the executives, bankers and exchange officials at the trading ceremony, where a big barrel of sake was broken to symbolise new beginnings and good fortune.
With this IPO, Singapore will be hoping to join the party in the region. Bourses across Asia-Pacific have been raking in new listings, with firms raising US$39 billion of fresh capital so far this year, the most since 2023. Hong Kong, its main financial hub rival, and India are booming, while the city-state has watched from the sidelines – until now.
'This listing is hugely important,' said Pol de Win, Singapore Exchange Ltd.'s head of global sales and origination. 'The IPO market has been challenging for a while, so it's important to see a high quality asset come to market and show the way for others.' The exchange, along with banks and others, have been in talks with NTT executives for years, he said.
Underscoring the stakes for the country, its sovereign wealth fund GIC Pte. bought more than $100 million worth of units as a cornerstone investor, making it the REIT's second-biggest shareholder. It's the first time GIC has provided such support to a local IPO, notwithstanding the 2010 jumbo listing of its overseas logistics unit, based on Bloomberg checks.
That said, the landscape has been increasingly barren in Singapore. Four IPOs in the city raised just over $34 million last year – the second-lowest tally in more than two decades, according to data compiled by Bloomberg.
'GIC's mandate is to preserve and enhance the international purchasing power of the reserves under our management over the long term,' a spokesperson for the firm said in response to queries. There has been no change in the firm's policies, which allow it to invest in SGX entities, the spokesperson said.
The offer drew interest from long-only and wealthy investors, according to people familiar with the matter. Against geopolitical tensions and interest rates that remain elevated, the firm offered a more generous yield as investors were price sensitive, the people said, asking not to be identified as the process is confidential.
NTT DC REIT set a forecast distribution yield of 7.5 per cent from July to March 2026, according to the prospectus, a figure at the higher end of a marketed range. Its US$773 million fundraise comes at the lower end of initial estimates. The placement tranche was about four times subscribed, while the Singapore public offer was close to 10 times subscribed.
The investment trust's US$1.6 billion portfolio consists six data centers across Singapore, Austria, and the US. It's backed by Japan's NTT Ltd, part of the NTT telecoms giant with extensive data centre presence around the world.
'The demand is not perfect, but we got GIC as a cornerstone investor and its commitment shows the market still believes in our story,' Yutaka Torigoe, chief executive officer of the REIT manager, said at a briefing last week.
Singapore will be hoping firms in its IPO pipeline are encouraged by NTT DC REIT's performance, as well as the stock market index that have reached new highs.
'With NTT leading the way, other issuers are picking up the pace,' Loh Boon Chye, SGX's chief executive officer, said at Monday's listing ceremony. 'Conversations are building, pipelines are forming and confidence is gaining ground.'
The government has announced a raft of incentives including tax perks to attract listings and incentives for funds to buy local stocks, while authorities are also mulling streamlining prospectus requirements.
Hong Kong's Link REIT and France's Praemia REIM are among firms exploring REIT IPOs in Singapore, Bloomberg News has reported. Outside of real estate, companies such as UltraGreen.ai and Neon are also reportedly considering floats on the SGX.
'Just by having the deal able to come to market, is already a win,' said Art Karoonyavanich, head of equity capital markets at DBS Group Holdings Ltd, the country's biggest bank. 'That already signals that this whole initiative, the ability to bring good quality issuers to this market, is there.' There're many more firms in the lineup to list, he said.
Besides DBS, Bank of America Corp, UBS Group AG, Mizuho Financial Group Inc and Citigroup Inc also worked on the IPO. UBS' wealth management customers were among cornerstone investors.
'I hope it will not be a dead cat bounce.' Robson Lee, a partner at global law firm Kennedys who heads its Singapore corporate practice, said of the IPO. 'There would always be issues of liquidity and valuation, and I think the government needs to address this.'
NTT DC REIT will join around 40 REITs and property trusts that trade on the SGX. These real estate investment trusts make up about 10 per cent of total market capitalisation, according to the REIT Association of Singapore. The new player will have comparables like Keppel DC REIT and Digital Core REIT Management Pte.
SGX's de Win said the exchange seeks to lure Southeast Asian growth firms, meaning future IPO fund raises may be between US$200 million to US$300 million. This will be the SGX's 'bread and butter for the years to come,' according to de Win, reflecting more bite-sized plans that contrast to ambitions years ago when the bourse went after big global listings.
More stories like this are available on bloomberg.com
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