Hong Kong’s PCCW Group reportedly plans to launch an initial public offering (IPO) of its telecoms business tomorrow (Wednesday 9 November 2011), two anonymous sources ‘with direct knowledge of the plans’ told Reuters today. The IPO plan involves spinning off PCCW’s telecoms assets to form Hong Kong’s first investment trust (or business trust), to be called HKT Trust. The conglomerate will list so-called ‘share stapled units’, with each single unit of PCCW’s telecoms business comprising a unit of HKT Trust, a preference share in Hong Kong-based telecoms operating company HKT Limited and an interest in ordinary shares of HKT Limited held by a ‘trustee manager’ (expected to be an affiliate of PCCW). The business trust model is aimed at raising cash from investors (unit holders) without relinquishing control.
PCCW started pre-marketing the deal on 25 October to investors in Asia, Europe and the US. The IPO could raise between USD1.2 billion and USD1.4 billion, said Reuters’ sources, while PCCW has indicated that HKT Trust will have a minimum market capitalisation of USD3.7 billion and distribute at least USD330 million to unit holders in 2012.