Southeast Asia's largest developer CapitaLand will list 20-30 percent of its shopping mall arm in a Singapore initial public offering that sources said could raise at least $1 billion.

CapitaLand Retail, a unit owning or managing 86 malls across Asia worth S$20 billion, aims to list its shares this year or early next year, in what will be Singapore's biggest IPO in several years, another sign of the recovery global IPO market.

Some analysts said the move would be welcomed by investors, due to the long-term prospects of the company and the quality of its assets, if CapitaLand sets the offering at the right price.

Conceptionally I think the idea is actually favourable since it has been a while since the issuance of the last real estate investment trust, said Gabriel Yap, senior dealing director at DMG & Partners in Singapore.

The global market for IPOs has picked up following the rebound in stock markets, though not all offerings in Asia have fared well, given their high valuations.

Singapore palm oil firm Wilmar delayed the $3 billion IPO of its China unit last month due to concerns about weakening investor interest.

CapitaLand said on Monday the timing would depend on market conditions. It intends to retain a majority stake in the shopping mall business, which will be renamed CapitaMalls Asia. It declined to give a value of how much it aims to raise.

I think anything between 20-30 percent is comfortable, Olivier Lim, CapitaLand's Chief Financial Officer told a media and analysts' briefing, referring to the size of the stake that the company might float.

I don't think there's an immediate urgent need for cash, so I don't think we are going to sell a 40-45 percent stake of the company, he added.

CapitaLand Retail's first-half earnings before interest and tax were S$245 million, and its net asset value as of end-June was S$5.3 billion ($3.75 billion).

CapitaLand's retail business includes managing property funds such as CapitaMall Trust and CapitaRetail China Trust.

CapitaLand halted trading in both units plus the parent company's stock early on Monday. CapitaLand shares have gained 42 percent this year, slightly underperforming the broader Singapore index's .FTSTI 48 percent rise.

LUXURY SPENDING

The company said it may also consider recommending a special dividend to its shareholders after listing its unit. It will seek shareholders approval for the plan later in October.

Listings in Singapore have dried up with just one in the April-June quarter, versus nine a year earlier, though Singapore Exchange said in August it expected more IPO demand.

The shopping mall offering would be the biggest in Singapore since Thai Beverage raised S$1.37 billion in May 2006.

With the quality of its assets I don't think the company should have any issue raising S$1.5 billion from this transaction, said an analyst who declined to be identified.

Affluent Singapore is opening several new shopping malls this year, including CapitaLand's ION Orchard, as new luxury brands expand to tap a country with the world's highest density of millionaires [ID:nSIN40814].

Property consultancy DTZ said in a report on Monday that rents in Singapore's main shopping boulevard Orchard Road are 7-14 percent below the peak levels seen about a year ago, versus Singapore office rents that are down more than 50 percent.

Asia's retailers have held up relatively well in the financial crisis compared to U.S. and European peers. [ID:nSP492307]. Wal-Mart WMN.SI and Sweden's Hennes & Mauritz are both opening new stores in China.

JPMorgan is sole financial adviser for the planned listing and is joint issue manager with DBS.

 ($1=1.415 Singapore Dollar)

(Additional reporting by Kevin Lim; writing by Neil Chatterjee; editing by Valerie Lee)