This will be good for GMG's valuation. Especially if it gets valued at 21 times earnings like GLP does!
HONG Kong is fast becoming the listing hub of choice for foreign companies with an Asian angle, with Goodman Group the latest to consider a dual-listing in the region.
With the help of its long-term adviser Macquarie Capital, the property developer and manager is believed to have begun in the past couple of weeks what's been described by fund managers as "conceptual" discussions with investors about a potential dual-listing in Hong Kong later this year or early next year.
A capital raising of as much as $500 million is expected to accompany the listing.
The idea is an Asian listing will allow Goodman to tap into higher valuations as it pursues growth through the region.
Excluding property re-valuations, Goodman trades at a price to 2012 earnings of 12 times, compared with its rival Global Logistic Properties (the real estate unit of the Government of Singapore Investment Corporation), which is trading at 21 times forward earnings on the Singapore Stock Exchange. GLP, which has assets in China and Japan, operates a similar business model to Goodman.
The fact that Asian investors are prepared to pay such high prices for property developers and managers is an obvious attraction.
Goodman has operations in Hong Kong, Japan and China, which is expected to be a focus of its Asian expansion plans.
It has about $178m in assets under management in China, where GLP sees an "almost unlimited opportunity" for development thanks to "ferocious" demand particularly for third-party logistics operations.
Goodman, which won approval for a joint venture bid to buy out ING Industrial Fund and its $2.5 billion worth of property last month, has said it is "actively exploring opportunities to increase the size and scale" of its assets under management operations in Asia and Europe.
In the six months to December 31, 12 per cent of Goodman's operating earnings before interest and tax were generated in the Asia-Pacific region.
Goodman, which has a $4bn development pipeline in Asia, counts Chinese sovereign fund China Investment Corporation as its largest shareholder, with an effective stake of about 18 per cent. The relationship with CIC is expected to help the company with plans for an Asian listing.
Goodman isn't alone among Australian companies at examining listings in Asia, with Andrew Forrest's Fortescue Metals Group last week saying it was considering a listing in Hong Kong, which is running a campaign to lure Australian resource companies.
Consumer goods companies, which have a massive Asian customer base, are also looking at listings in the region, with Italian fashion house Prada last week applying for a Hong Kong listing.
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