The Straits Times / The Business Times News on Hyflux

Temasek plans to take S'pore's first infrastructure fund public

Initial assets worth $400m comprise town gas supplier, desalination plant

TEMASEK Holdings is setting up Singapore's first infrastructure fund, CitySpring Infrastructure Trust (CitySpring), and taking it public as well. The fund comprises initially the assets - worth almost S$400 million - of the republic's sole town gas supplier and its first and only large-scale seawater desalination plant.

The Singapore investment company plans to sell 321.75 million units in CitySpring through a placement and public offering sometime this year, but did not give the pricing.

Temasek said that it eventually intends to position CitySpring as its key platform for future infrastructure investments in Asia, Middle East, Australia and New Zealand.

Announcing this yesterday, Temasek said that its subsidiary, CitySpring Infrastructure Management, has lodged a preliminary prospectus with the Monetary Authority of Singapore for the proposed initial public offer of CitySpring and its proposed listing on the Singapore Exchange Securities Trading Limited.

The initial portfolio of CitySpring will comprise 100 per cent of City Gas Trust and 70 per cent of SingSpring Trust. City Gas Trust will acquire the business undertaking of City Gas, which is the sole producer and retailer of town gas and which currently has the sole licence for retailing town gas here.

SingSpring Trust will acquire the business of SingSpring which owns and operates the republic's first and only large -scale seawater desalination plant, one of the largest membrane-based desalination plants in the world. The 136,380 cu m per day plant, operational since end-2005, has a 20-year water purchase agreement with the PUB.

Temasek declined to specify the value of the gas and water assets which will come under CitySpring, but a rough estimate puts it at at least S$372 million.

CityGas' assets, according to its latest annual report, was worth S$219.3 million as at March 31, 2004.

SingSpring had assets worth S$218.3 million as at Dec 31, 2005 - with 70 per cent of this worth S$152.8 million.

Separately, water treatment firm Hyflux said yesterday that it plans to sell part of its interest in its desalination plant SingSpring to CitySpring.

Temasek, with an investment portfolio worth S$129 billion, said that CitySpring will seek to invest in infrastructure assets which will 'provide unitholders with regular and predictable distributions, with the potential for long-term capital growth.'

Mr Fai Au Yeung, the CEO of trustee-manager CitySpring Infrastructure Management, said, 'There is strong growth potential in the infrastructure industry in Asia. The Asian Development Bank estimates that Asia will require US$250 billion per annum until 2010 to fund new infrastructure investment and to maintain existing facilities.'

'Economic development and rapid urbanisation have put increasing strain on many countries' infrastructure, resulting in investment opportunities in many sectors, including utilities, transportation and communications. CitySpring intends to tap these opportunities and invest in a diversified range of infrastructure businesses,' he added.

Temasek, as sponsor of the infrastructure trust fund, will hold 28.5 per cent of the units upon listing, making it the single largest unitholder. It intends to remain CitySpring's single largest unitholder.

Temasek managing director Margaret Lui said that 'Temasek will support CitySpring through our international reach and business network in the sourcing for acquisition opportunities,' adding that 'we intend to co-invest in infrastructure assets with CitySpring where appropriate.'

Temasek said that it also intends to enhance CitySpring's pipeline of acquisition opportunities by acquiring infrastructure assets 'which may be at an early stage where they have not yet generated regular and predictable cashflows', and giving the latter an opportunity to acquire these when they are more mature.

Morgan Stanley and DBS Bank are advising CitySpring.