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I have filled the form in acceptance of the voluntary conditional cash offer for CapitaMalls Asia.
Although there are arguments that the offer price is unfair and although I can understand the arguments, I feel that there is a great degree of subjectivity too. Much is relative.
Just like how we compare an investment with another to see how it could be undervalued or overvalued, we could also compare an investment with itself in the past to see how its value has changed over time.
CapitaLand’s offer works out to about 1.2x CapitaMalls Asia’s book value now which is cheaper than the 1.5x book value when it listed in 2009. If we want 1.5x book value today, the price is closer to $2.70 a share.
So, for someone who bought into CapitaMalls Asia at the IPO price of $2.12 a share, obviously, the voluntary conditional cash offer of $2.22 a share leaves a bad taste in the mouth. However, for someone who bought at under $1.20 a share during the lows in late 2011 which was at a 20% discount to the NAV/share back then, $2.22 is probably a sweet enough exit price.
I think it is a fair enough offer and I explained why in an earlier blog post:
"The NAV/share is $1.84. So, this offer is a 20% premium to book value. NAV grew 10% year on year. So, being paid $2.22 a share, it is like getting paid in advance for growth that is likely to happen in the next couple of years."
We might want to remember what Warren Buffett thinks of IPOs. If you cannot remember, go to the earlier blog post I mentioned above: CapitaMalls Asia: Being offered $2.22 a share.
Better to wait for a price that is so attractive that even a mediocre sale gives good results.
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