Singapore beat Hong Kong to lure the initial stock sale of record 19-time English soccer champion Manchester United Ltd. in part by assuring a speedier approval process, bankers with knowledge of the matter said.
A pledge by Singapore Exchange Ltd. (SGX) to shrink the time lag between IPO application and approval to as little as four weeks -- from the usual two to three months -- was key to swaying United, said the bankers, who requested anonymity as they’re not authorized to discuss the deal. United plans to raise about $1 billion to reduce its debt burden and finance player purchases, people familiar with the IPO said last week.
Singapore Exchanges Chief Executive Officer Magnus Bocker’s push to lure United is a sign of increased competition between the city-state and Hong Kong for IPOs by global brands. Hong Kong, whose market capitalization is more than four times that of Singapore, this year hosted offerings by Prada SpA, Glencore International Plc and Samsonite International SA, extending its lead as Asia’s premier venue for IPOs.
“If all the major listings are going to Hong Kong, people might increasingly see the SGX as not as important,” said James Koh, a Singapore-based analyst at Kim Eng Securities Ltd., using an abbreviation for Singapore Exchange. “That’s why it’s good to get a big catch like that.”
Time to Market
United applied for a listing on Aug. 18, according to the people. The company expects to start gauging demand for the IPO in mid-September and aims to begin trading in the first half of the following month, they said. United has held talks with Temasek Holdings Pte., Singapore’s state-owned investment company, about buying shares in the IPO, according to the people.
“Time to market is always important when you want to raise money quickly,” said Kevin Scully, executive chairman of NRA Capital, a Singapore-based financial adviser. “The longer you wait, the more uncertain the market might become and valuations you thought you could get might not be there anymore.”.
Bocker and listings head Lawrence Wong led the efforts to woo United, the people said. Hong Kong’s bourse typically takes one and a half to two months to approve an IPO application, according to bankers familiar with the matter.
Manchester United spokesman Philip Townsend declined to comment, as did spokespeople for Singapore Exchange and Temasek.
“Hong Kong’s listing process is efficient and HKEx aims to keep it that way,” Hong Kong Exchanges & Clearing Ltd. said in an e-mailed statement. “The process is interactive so there are no typical cases, and there are fast-track cases from time to time.” The bourse didn’t specify any cases where it has allowed speedier approval.
Singapore isn’t competing with Hong Kong for IPOs, Bocker said in an Aug. 23 interview. He declined to comment on United’s offering.
“We are offering different things,” Bocker said. “Hong Kong has been very successful in offering listings for companies that want to have a very Chinese focus. Singapore has a very strong offering for companies that want to have much broader focus, reaching out to India, Southeast Asia and even to China.”
Luring United may help Bocker, a 49-year-old Swede who took the helm at Singapore Exchange in December 2009, recover from setbacks including the failed attempt to acquire the operator of Australia’s bourse, ASX Ltd. (ASX), for A$8.3 billion ($8.7 billion). That deal was blocked by Australia’s government in April.
Glencore, run by billionaire Ivan Glasenberg, picked London and Hong Kong for an IPO that raised $10 billion in May. After learning that Glencore was considering listing in Hong Kong, Bocker called bankers working on the deal, asking them to persuade the company to choose Singapore instead, a person with direct knowledge of the matter said.
Bocker flew to London before United was due to submit a listing application to Hong Kong’s exchange, seeking to convince billionaire owner Malcolm Glazer to pick Singapore, the Straits Times reported Aug. 21, citing unidentified people.
United CEO David Gill and Chief Operating Officer Edward Woodward were in Singapore last week meeting with bankers and exchange officials, a person with knowledge of the matter said.
“I’ve got a bit of sympathy for the Singapore Exchange,” said Daniel Yong, head of the asset management practice at law firm Norton Rose LLP in Singapore. People “don’t give credit to the Singapore Exchange for the breadth and variety of listing applicants that they try to attract.”
Hong Kong Advantage
Hutchison Port Holdings Trust, an owner of port assets controlled by Hong Kong billionaire Li Ka-shing, raised $5.5 billion in Singapore’s largest IPO in March. Even so, the bourse remains far behind Hong Kong in attracting companies to list.
Companies have raised $178 billion in IPOs in Hong Kong since the beginning of 2006, led by the $17.8 billion sale of AIA Group Ltd. (1299) in October last year, data compiled by Bloomberg show. That’s more than seven times the amount garnered in first- time offerings in Singapore over the same period.
Hong Kong’s development as an IPO hub benefited from its proximity to China, as Chinese companies buoyed to the country’s economic expansion rushed to tap the city’s stock market. Chinese companies account for nine of the 10 biggest IPOs in Hong Kong’s history, Bloomberg data show.
“Hong Kong may have an advantage in terms of listing Chinese companies because they already have a critical mass,” said Ng Soo Nam, the Singapore-based chief investment officer at Nikko Asset Management Co., which oversees about $154 billion. “The more international names Singapore Exchange can get to list here, the more they can attract.”
Bocker’s sales pitch to United also touched on soccer’s rising popularity in Southeast Asia, the bankers said. United estimates 190 million of its 330 million fans are in Asia. Singapore, with a population of 5.1 million, has the world’s highest concentration of millionaires.
Singaporean Peter Lim in October offered 320 million pounds for Liverpool, the soccer team that finished sixth in the last Premiership season. He later pulled the offer, saying Liverpool’s board wouldn’t talk to him. Tony Fernandes, the CEO of Malaysia’s AirAsia Bhd, this month agreed to buy Queens Park Rangers, the west London-based soccer club newly promoted to the Premier league.
“The appetite is big in Asia for the Premier League,” said Fernandes in an Aug. 18 interview. “Singapore’s got lots of capital and Manchester United is a very strong brand in Southeast Asia. It’s a smart move if done correctly.”