Directory listings business Yellow Pages Singapore Pte. Ltd said on Monday it aims to raise up to US $140 million through an initial public offering of shares priced between S$1.46 ($0.89) and S$1.66 each. The shares in Singapore's third-largest IPO this year are projected to have a dividend yield of between 7 and 8 percent to lure investors - a premium over the average dividend yield for the Singapore stock market of about 2-3 percent.
"Yield stocks have been a strong theme in the market, and 7 percent is good," said Christopher Wong, fund manager at Aberdeen Asset Management, which manages US $6 billion in funds in Asia.
Some of Singapore's best-performing stocks are high-yielding firms such as cellular firm MobileOne Ltd and transport group ComfortDelGro Corp Ltd.
Yellow Pages Chief Executive Goh Sik Ngee said his company's dividend policy was to pay out 100 percent of its earnings.
"Our dividend policy is shareholder-friendly. We do not need a lot of cash to run the business," he told a news conference.
But a Singapore fund manager said the Yellow Pages business was not attractive, given the limited growth opportunities.
Goh said Yellow Pages still saw good growth potential in Singapore. "Although we are the dominant market leader, our business has not peaked."
The company was embarking on initiatives to increase revenues, including delivering the directories directly to homes and businesses, and incorporating discount coupons in directories to encourage usage, he said.
Only 11 percent of local firms advertise in Yellow Pages, compared with 20-40 percent in overseas markets, Goh added.
The company has more than an 80 percent share of the Singapore directory market and earned net profit of S$17.1 million in the year to March 31, 2004, down 31.6 percent from the previous year.
One broker who has seen the IPO's term sheet said the offer represents up to 80 percent of the company and would include 45 percent primary shares and 55 percent secondary shares.
The IPO comes as an exit for private equity firms CVC Asia Pacific and J.P. Morgan Partners Asia, which bought the firm from Singapore Telecommunications Ltd last July for S$220 million.
Yellow Pages had said in its prospectus that it planned to use proceeds from the IPO to repay a loan of S$83 million and boost working capital.
The IPO is being managed by Swiss bank UBS AG and Singapore's DBS Group Holdings Ltd.