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05-09-2011, 06:17 AM
The Straits Times
Sep 5, 2011
commentary
Man U may score on pitch but not on bourse
Manchester United's listing will raise SGX profile, but bears risks
By Yasmine Yahya
BOTH stock market punters and football fanatics were bowled over recently by news that Manchester United is planning to launch a US$1 billion (S$1.2 billion) initial public offering (IPO) in Singapore.
Not only would this be among the biggest listings ever in Singapore's financial history, but it would also mean that ardent fans of the world's most famous football club will be able to own a piece of it easily.
No longer would wannabe club managers in Singapore have to confine their analysis of football tactics and management strategies to the coffee shop. For the price of one lot of shares, they can soon participate in Manchester United shareholder meetings and voice concerns to the management, face-to-face.
But it is the Singapore Exchange (SGX) which is likely cheering the loudest over the Red Devils' plan.
Many financial commentators have called this IPO a major coup for the SGX, and with good reason.
While many big names from the West are flocking to Asia to raise funds, most of them have picked Hong Kong over Singapore as their bourse of choice. Hong Kong was the top venue for such listings in Asia in the past two years.
Luxury label Prada, the world's biggest luggage maker Samsonite and Swiss commodities giant Glencore all saw that rising consumption in Asia will be the main driver of their future business growth, and all three chose to launch listings in Hong Kong earlier this year.
In fact, sources say that Manchester United's billionaire owner Malcolm Glazer and his investment bankers had also decided to launch the club's IPO in Hong Kong.
But just days before they were to submit an application for a listing on the Hong Kong Stock Exchange (HKEx), SGX chief executive Magnus Bocker flew to Hong Kong to meet Mr Glazer and change his mind.
The listing may finally rid Singapore of its image as a poorer cousin to Hong Kong. It will give credence to Mr Bocker's oft-repeated view that while Hong Kong is a good market for companies that are focused on expanding in China, Singapore is the best gateway from which to grow a broader Asian presence.
Singapore is, after all, where a lot of the South-east Asian money is. Already, it is fast closing the gap with Switzerland, traditionally the world's dominant centre for wealth management. A PricewaterhouseCoopers (PwC) report in June said that Singapore will become the world's top wealth management centre by 2013, ahead of Switzerland, London and Hong Kong.
The listing will also help the SGX move away from an image as a bourse mainly for penny stocks and China-based firms, and raise the bar for its listings.
The SGX has also been working hard to come up with ways to raise liquidity and valuations on the local market - to limited effect - and having a big name such as Manchester United will likely help in this regard. The hope is that the Red Devils' entry will coax other big international firms to list in Singapore.
But already, the listing is running into controversy. There are rumours that one reason why Mr Glazer chose Singapore over Hong Kong was because Singapore's listing requirements and regulations were the more lax of the two.
This is unlikely, given that the SGX has strict listing requirements and insists that all listed companies engage in continuous disclosure, to keep shareholders constantly updated on its changes.
SGX's actions over the Manchester United listing will be under scrutiny. Investors may become wary if a stock is perceived to be listed under lax conditions.
And even if Manchester United does list in a couple of months' time, the final proof of success will come only later.
While Manchester United may have 333 million fans worldwide, and is considered to be the world's most valuable football club with an estimated worth of US$1.86 billion, it is uncertain how many investors actually want to own a piece of it. It is, after all, debt-laden. Early last year, Mr Glazer issued a £504 million (S$983.9 million) bond to shore up the club's cash pile. The club's latest annual report shows that its debt is about £700 million, with annual interest payments of about £40 million.
A check of stock market forums online shows some scepticism from local retail investors. Some netizens quipped that the funds raised from the IPO will simply end up in the pockets of Manchester United players such as Wayne Rooney and Ashley Young, in the form of extravagant salaries.
Neither is Singapore's track record with major international IPOs all that reassuring. In March this year, the SGX managed to snatch the IPO of Hutchison Port Holdings Trust from its own home market of Hong Kong, partly because only Singapore had a business trust structure. At US$5.5 billion, it was also Singapore's biggest-ever IPO.
But since its listing, Hutchison Port Holdings Trust has not managed to rise above its debut price of US$1.01. Today, it is trading at 60.5 US cents, down 40 per cent from its IPO price, making it one of the worst-performing market debutantes so far this year.
Thailand's largest beverage maker, Thai Beverage, launched its IPO in Singapore in 2006. At the time, it was Singapore's second-largest IPO ever, raising $1.4 billion with an offer price of 28 cents a share.
But since then, it has been trading within a tight range, and the highest closing price it has recorded is 30 cents.
If the Manchester United IPO goes underwater after its debut, it will be a blow to Singapore's aspirations to attract more such firms.
It is thus up to both Mr Bocker and Mr Glazer in the months ahead to convince both football fans and market watchers that a winner on the soccer pitch will be a winner in investors' portfolios as well.
yasminey@sph.com.sg
Sep 5, 2011
commentary
Man U may score on pitch but not on bourse
Manchester United's listing will raise SGX profile, but bears risks
By Yasmine Yahya
BOTH stock market punters and football fanatics were bowled over recently by news that Manchester United is planning to launch a US$1 billion (S$1.2 billion) initial public offering (IPO) in Singapore.
Not only would this be among the biggest listings ever in Singapore's financial history, but it would also mean that ardent fans of the world's most famous football club will be able to own a piece of it easily.
No longer would wannabe club managers in Singapore have to confine their analysis of football tactics and management strategies to the coffee shop. For the price of one lot of shares, they can soon participate in Manchester United shareholder meetings and voice concerns to the management, face-to-face.
But it is the Singapore Exchange (SGX) which is likely cheering the loudest over the Red Devils' plan.
Many financial commentators have called this IPO a major coup for the SGX, and with good reason.
While many big names from the West are flocking to Asia to raise funds, most of them have picked Hong Kong over Singapore as their bourse of choice. Hong Kong was the top venue for such listings in Asia in the past two years.
Luxury label Prada, the world's biggest luggage maker Samsonite and Swiss commodities giant Glencore all saw that rising consumption in Asia will be the main driver of their future business growth, and all three chose to launch listings in Hong Kong earlier this year.
In fact, sources say that Manchester United's billionaire owner Malcolm Glazer and his investment bankers had also decided to launch the club's IPO in Hong Kong.
But just days before they were to submit an application for a listing on the Hong Kong Stock Exchange (HKEx), SGX chief executive Magnus Bocker flew to Hong Kong to meet Mr Glazer and change his mind.
The listing may finally rid Singapore of its image as a poorer cousin to Hong Kong. It will give credence to Mr Bocker's oft-repeated view that while Hong Kong is a good market for companies that are focused on expanding in China, Singapore is the best gateway from which to grow a broader Asian presence.
Singapore is, after all, where a lot of the South-east Asian money is. Already, it is fast closing the gap with Switzerland, traditionally the world's dominant centre for wealth management. A PricewaterhouseCoopers (PwC) report in June said that Singapore will become the world's top wealth management centre by 2013, ahead of Switzerland, London and Hong Kong.
The listing will also help the SGX move away from an image as a bourse mainly for penny stocks and China-based firms, and raise the bar for its listings.
The SGX has also been working hard to come up with ways to raise liquidity and valuations on the local market - to limited effect - and having a big name such as Manchester United will likely help in this regard. The hope is that the Red Devils' entry will coax other big international firms to list in Singapore.
But already, the listing is running into controversy. There are rumours that one reason why Mr Glazer chose Singapore over Hong Kong was because Singapore's listing requirements and regulations were the more lax of the two.
This is unlikely, given that the SGX has strict listing requirements and insists that all listed companies engage in continuous disclosure, to keep shareholders constantly updated on its changes.
SGX's actions over the Manchester United listing will be under scrutiny. Investors may become wary if a stock is perceived to be listed under lax conditions.
And even if Manchester United does list in a couple of months' time, the final proof of success will come only later.
While Manchester United may have 333 million fans worldwide, and is considered to be the world's most valuable football club with an estimated worth of US$1.86 billion, it is uncertain how many investors actually want to own a piece of it. It is, after all, debt-laden. Early last year, Mr Glazer issued a £504 million (S$983.9 million) bond to shore up the club's cash pile. The club's latest annual report shows that its debt is about £700 million, with annual interest payments of about £40 million.
A check of stock market forums online shows some scepticism from local retail investors. Some netizens quipped that the funds raised from the IPO will simply end up in the pockets of Manchester United players such as Wayne Rooney and Ashley Young, in the form of extravagant salaries.
Neither is Singapore's track record with major international IPOs all that reassuring. In March this year, the SGX managed to snatch the IPO of Hutchison Port Holdings Trust from its own home market of Hong Kong, partly because only Singapore had a business trust structure. At US$5.5 billion, it was also Singapore's biggest-ever IPO.
But since its listing, Hutchison Port Holdings Trust has not managed to rise above its debut price of US$1.01. Today, it is trading at 60.5 US cents, down 40 per cent from its IPO price, making it one of the worst-performing market debutantes so far this year.
Thailand's largest beverage maker, Thai Beverage, launched its IPO in Singapore in 2006. At the time, it was Singapore's second-largest IPO ever, raising $1.4 billion with an offer price of 28 cents a share.
But since then, it has been trading within a tight range, and the highest closing price it has recorded is 30 cents.
If the Manchester United IPO goes underwater after its debut, it will be a blow to Singapore's aspirations to attract more such firms.
It is thus up to both Mr Bocker and Mr Glazer in the months ahead to convince both football fans and market watchers that a winner on the soccer pitch will be a winner in investors' portfolios as well.
yasminey@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/