Business Trust as a New Asset Class (II)

Since I wrote the piece on Business Trust, CitySpring Infrastructure Trust (CitySpring) made its debut on the Singapore Stock Exchange (SGX) yesterday after a successful Initial Public Offering (IPO) exercise.

CitySpring is the first infrastructure Business Trust registered with the Monetary Authority of Singapore (MAS). It is a pioneer in this new asset class in Singapore. I would expect some more business theme-based Business Trusts to be launched in the future. Retail investors besides institutional investors can now share in the ownership of several mega businesses making up the Business Trust.

CitySpring’s initial portfolio (the “Initial Businesses”) will comprise 100% of the City Gas Trust, the sole producer and retailer of town gas and the sole user of the low-pressure piped town gas network in Singapore, and 70% of the SingSpring Trust, the sole supplier of desalinated water to the Public Utilities Board. (Source: Prospectus) CitySpring will invest or acquire infrastructure assets in the growing Asian, the Middle East and Australia focusing on utilities, logistics, transport and communications (Source: The Straits Times 13 February 2007).

It is the objective of CitySpring to provide Unitholders with long-term, regular and predictable distributions. For the year 2007 ending 31 March 2008, the projected tax-free distribution yield is 6.7% for the year based on the IPO listing price of $0.89.

On its debut at the SGX yesterday afternoon, the trading volume for just half a day was a hefty 156.4 million units. The price hit a high of $1.51 at one point before ending at $1.48 for the day up 66 percent from the listing price of $0.89.

Written on 2/13/2007 8:35 AM

Copyright © 2007, the author known as LKT in Singapore.

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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