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Singapore IPOs: Why I No Longer Cover Every Listing

Some readers may have noticed that I have not been writing about every Singapore IPO since last year. The simple reason is that life has become busier. Between my day job, an increasingly packed travel schedule, family commitments and desire to play more golf, I have become much more selective about how I spend my time.  Writing detailed IPO reviews takes time — reading prospectuses, analysing financials, comparing valuations and understanding the competitive landscape. While I still enjoy investing and writing, I no longer feel the need to cover every IPO that comes to market. Instead, going forward, I will probably focus only on IPOs where I am seriously considering investing my own money or where there is something particularly interesting that is worth discussing. I suspect this will make the blog more useful as well. Rather than writing about every deal, I can spend more time sharing my thoughts on the handful that I believe deserve attention. That bring...
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Saizen REIT


(Japanese-tori decorated IPO booth at Raffles Place)

Saizen REIT is Singapore's first Japanese residential reit to be listed on SGX. Saizen is offering 196,740,000 Units at S$1 each. The IPO will close on Nov 5 at 8 am.



The 6.5% yield is a bit misleading as it is based from the period from 5 Nov 2007 to 30 June 2008. For the full year from 1 July 2008 to 30 June 2009, the yield is expected to be 5.65%. Investors who want exposure in this REIT should consider the following:
(1) Residental property outlook for the Japan market (an improving market will increase the value of the properties held by the Trust);
(2) The JPY/SGD forex rate. A weak Yen against S$ will mean a lower rental income in S$.
(3) A rise in lending rate in Japan market may increase the cost of borrowing. As it is, the borrowing cost of Yen is low, so any increase in borrowing rate will increase the cost of financing.

You will need to consider if this asset class is suitable to you. For those who punt IPOs, it is likely to be a stag on the first day due to the following:

- Good underwriters in Morgan Stanley
- Stablisation process by Manager
- Yield compression to 5% may provide some upside to IPO price of between $1.10 to $1.30
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