Global Logistic Properties Limited IPO

Global Logistic Properties Limited

Indicative date and time (Singapore time) Event
October 11, 2010 at 6:00 pm . . . . . . . . . . . . . . . . . . Opening of the Public Offer
October 14, 2010 at 10:00 am . . . . . . . . . . . . . . . . . Close of Application List
October 15, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . Balloting of applications or otherwise as may be approved by the SGX-ST, if necessary (in the event of an over-subscription for the Offering Shares)
October 18, 2010 at 9.00 a.m. . . . . . . . . . . . . . . . . . Commence trading on a “ready” basis
October 21, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . Settlement date for all trades done on a “ready” basis on October 18, 2010

Global Logistic Properties Limited is offering 1,173,244,000 at the price range of S$1.78 - S$1.96 It means it will be raising around USD$1.77b 1,173,244,000*1.96*(1/1.3).

Proceeds will be used as followed
1) approximately S$1.5 billion (US$1.1 billion) to support our growth in China and Japan;
2) approximately S$0.6 billion (US$0.5 billion) to pay down existing shareholder loans, intercompany advances and any interest accrued thereon, described herein, and approximately ¥63.9 billion (US$0.7 billion) to redeem preferred equity as part of the Corporate Reorganization (see “History and Corporate Reorganization” for further details on the Corporate Reorganization and “Interested Person Transactions and Conflicts of Interests” for further details on the shareholder loans, intercompany advances and preferred equity).

Simple analysis
1)Cash on hand -->0.42billion usd
2)Total liability -->3,334,703,000(non current) + 1,936,494,000(current) = 5.2billion usd
*Over leveraging by a lot....
3)Lets say it raise (1,173,244,000*1.96) = 2.3billion sgd = 1.77 billion usd
4)Total cash in hand after IPO= 0.42billion + 5.2billion= 5.62billion , which will have excess 0.42billion.
5) however....... around 1.1billion usd will be use to support growth....means over leveraging again....... of around 0.7 billion usd..

Conclusion
Personally , i feel that they IPO-ed because they needed to , if not they will be in a very bad position if something goes wrong as their cash is so much less than their liability. They are making use of the market momentum and reputation GIC to get cash from the "investor" .
As from the way they allocate their money get from IPO , seems like they will not be changing their aggressive way of expanding , holding lesser cash then they owe.

I might ride on as the momentum to subcribe small amount of lots for punting but i will not hold for long term.
I feel that holding long term is a high risk investment.