DBS: Bringing the Reit to life in S’pore

Posted by luxuryasiahome on September 24, 2009

THE emergence of real estate investment trusts (Reits) as a highly popular instrument here, and applying for initial public offerings (IPOs) via the ATM, are all part and parcel of the financial landscape now.

However, they required much burning of the midnight oil to ensure they came to fruition, and DBS Bank was in the thick of these developments. By launching financial instruments that were new to Singapore such as Reits, bringing in foreign debt and equity offerings, as well as encouraging dual listings, it helped turn the Republic into a key fund-raising centre.

Earlier this month, DBS won an award from the Singapore Exchange (SGX) for just that pioneering role. SGX singled out the bank’s contribution of bringing in local and foreign listings as well as Reits.

DBS’ corporate finance department was set up in 1972. Many now-familiar public corporate names were listed here with the help of DBS. These include Olam, Hyflux and Venture Manufacturing. The bank also had a hand in the IPOs of many Temasek Holdings-linked companies such as Neptune Orient Lines, Singapore Airlines and SingTel.

Since 2000, its equity capital markets headed by Mr Kan Shik Lum has been involved in 90 IPOs.

DBS has many firsts to its name. It was involved in the SBS IPO in 1978, which was the first time CPF funds could be used to subscribe to shares. It also handled the IPO of Singapore National Printers – the first listing on the second board Sesdaq, now called Catalist – in 1987.

DBS also pioneered property securitisation deals in the local market. The first deal it nailed down was the $185 million securitisation deal of Neptune Orient Lines’ headquarters in Alexandra Road.

One of the largest securitisation deals the bank was involved with was the securitisation of the Raffles City complex for $985 million in 2001.

Other innovations, such as being able to apply for IPOs via the ATM, made life more convenient for investors. Previously, investors needed to fill in forms and had their funds tied up for days as their applications were processed.

Now they can apply for IPOs just by tapping a few buttons at the ATM. Their funds are not tied up for as long.

Refinements to this innovation were eventually added – such as being able to apply for rights shares or bonds on a first-come, first-served basis.

One of DBS’ successes was its role in bringing the Reit to life in Singapore. It has become a very popular product among investors.

So far, the bank has either launched or been involved with 14 out of the 21 Reits listed here. The first Reit in Singapore was the CapitaMall Trust. As Reits were new to the market here, DBS did its bit by organising seminars, briefings for remisiers and investor groups, as well as developing brochures and research reports for retail investors.

DBS’ head of asset-backed structured products Eng Seat Moey said: ‘It has proven to be a very liquid asset, a good alternative to fixed deposits.’

Since then, the bank has launched the first cross-border Reit in Asia as in the Fortune Reit from Hong Kong, the first Indian property trust with Ascendas India Trust as well as the first business trust and shipping trust in Asia with Pacific Shipping Trust and the very successful CapitaRetail China Trust.

What’s next for DBS?

DBS’ head of capital markets Eric Ang said: ‘We already have a critical mass of Reits in Singapore. We should be able to attract more Reits to Singapore as there is a strong following from both institutional and retail investors.

‘We expect more Reits from Singapore as there are business parks, industrial properties, malls as well as offices that could potentially go into Reits.’

His comments follow on from industry experts’ views that Singapore could expect another two to five Reits. It was also reported that Mapletree Investments is mulling a $4 billion Reit.

Mr Ang said: ‘Singapore could be a Reit centre where Reits from the region, including Hong Kong, China and Malaysia, will see Singapore as a preferred listing destination.’