The Straits Times / The Business Times News on Hyflux

CitySpring may acquire Hyflux's plants in China

HYFLUX'S water-treatment plants along China's east coast could be the next assets to be acquired by CitySpring Infrastructure Trust, officials said yesterday at the IPO launch of the infrastructure fund.

CitySpring is offering 321.75 million units at 77-89 cents that will give investors a projected tax-free yield of 6.75-7.75 per cent for the year ending March 31, 2008.

Disclosing that Hyflux has given CitySpring the right of first refusal for its China plants, the trust's CEO Fai Au Yeung said: 'Even as we were preparing for the IPO, we reached out over the last several weeks to some corporations which we have relationships with.'

Mr Au Yeung cited the possible acquisition of the Hyflux plants as an example of infrastructure assets the trust has in the pipeline.

Hyflux indicated in December last year that it might sell the plants this year to a trust or via an initial share sale.

CEO Olivia Lum said back then: 'We are not an asset-heavy company, we are a technology company. This is one of the opportunities for us to realise the hidden value of these projects . . . and we have talked to bankers to evaluate different options.'

The 13 Hyflux projects include desalination, water and waste-water treatment and recycling plants. They are reportedly worth about $400 million after completion and will generate 25-30 years of recurring revenue of about $160 million to $170 million a year.

CitySpring will kick off with an initial $400 million portfolio comprising Singapore's sole town gas supplier and first and only large-scale seawater desalination plant.

The trust aims to raise between $248 million and $286 million 'pre-greenshoe' and between $273 million and $315 million 'post-greenshoe' from its IPO.

The greenshoe option allows underwriters to sell additional shares if demand is high. In CitySpring's case, the greenshoe component will come out of Temasek Holding's initial share.

Temasek will be the trust's single-largest unit-holder with a 28.5 cent stake. Other major investors are global funds Fidelity Investment Management (HK) and Indus Capital Partners, which will buy a total of 43 million units or 13.5 per cent of the offering. Fidelity will take 9 per cent and Indus 4.5 per cent.

Applications for CitySpring units at ATMs or through the websites of participating banks can be made from 8am today to 12pm on Feb 5. The units will trade in lots of 1,000 units and trading on the Singapore Exchange is expected to start at 2pm on Feb 12.