The Straits Times / The Business Times News on Hyflux

Temasek to list S'pore's first infrastructure business trust

CitySpring will invest in two assets initially: City Gas, SingSpring

TEMASEK Holdings is listing Singapore's first business trust made up entirely of infrastructure projects. CitySpring Infrastructure Trust, as it is called, will initially include local gas supplier City Gas and a supplier of desalinated water SingSpring.

It aims to invest in infrastructure assets, mainly in Asia, the Middle East, Australia and New Zealand, focusing on utilities, transportation, logistics and communications.

The Singapore-based investment company has lodged a preliminary prospectus with the Monetary Authority of Singapore for the proposed initial public offering of CitySpring.

Once listed, it will be the second Singapore-registered business trust on the Singapore Exchange, after Pacific Shipping Trust listed last May.

Business trusts are a relatively new form of income instruments. They provide investors access to regular and predictable cash flows generated from their assets, which could be in any business.

There are some differences between business trusts and real estate investment trusts (Reits). For instance, a business trust can pay out its surplus cash as distributions, unlike Reits.

CitySpring aims to provide investors with the potential for long-term capital growth.

The initial portfolio comprises 100 per cent of City Gas Trust, Singapore's only producer and retailer of town gas, and 70 per cent of SingSpring Trust, the sole supplier of desalinated water to the Public Utilities Board.

Prior to the listing, City Gas was entirely owned by Temasek, while SingSpring was half owned by Hyflux and Temasek.

After the listing, Hyflux will hold 30 per cent of SingSpring.

Upon listing, Temasek will retain 28.5 per cent of CitySpring. It intends to remain the business trust's single largest unitholder.

Temasek's managing director (investment), Ms Margaret Lui, said: 'We intend to co-invest in infrastructure assets with CitySpring where appropriate.'

Temasek's wholly-owned unit, CitySpring Infrastructure Management, will be CitySpring's trustee manager.

The unit's chief executive, Mr Fai Au Yeung, said: 'There is strong growth potential in the infrastructure industry in Asia.

'The Asian Development Bank estimates that Asia will require US$250 billion (S$384 billion) per annum until 2010 to fund new infrastructure investment and to maintain existing facilities.'

Temasek said in a statement that it 'intends to position CitySpring as its key platform for infrastructure investments'.