UPDATE 2-Singapore GIC eyes up to $1 bln logistics IPO-sources

* IPO could be between $500 mln to $1 bln - sources

* May include Japan, China assets bought from ProLogis-sources

* JPMorgan, Citi among banks leading talks for IPO - sources

* GIC, JPMorgan and Citi decline comment

* IPO will help GIC raise funds for new investments (Releads with timing, milestone, pitching details from IFR)

By Saeed Azhar

SINGAPORE, May 26 (Reuters) - The Government of Singapore Investment Corp (GIC) may list its logistics business in the city-state later this year in an IPO valued at up to $1 billion, sources with knowledge of the deal told Reuters.

The deal, which is set to be the biggest IPO in Singapore since CapitaMalls Asia (CMAL.SI) raised $2 billion late last year, will allow the world's fourth-biggest sovereign fund to raise cash for more investments.

The $300 billion fund has been actively participating in deals in recent months after it reduced its exposure to equities at the start of the global credit crisis.

GIC is underwriting British insurer Prudential Plc's $21 billion rights issue and has bought stakes in newly-listed companies such as Hyatt Hotels (H.N) and Shanda Games (GAME.O).

The logistics business is part of GIC Real Estate, or GIC RE, which ranks among the world's top-10 real estate investment firms.

GIC RE, whose president Seek Ngee Huat was a former partner at Jones Lang LaSalle, manages a multi-billion dollar global portfolio of property assets, with over 200 investments in more than 30 countries. Real Estate is classified under alternatives and accounted for 12 percent of its assets as of March 2009.

GIC, Singapore's biggest sovereign wealth fund, declined comment on the IPO plans.

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For StreetSight data on GIC: r.reuters.com/cyv46k

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The timing for the IPO -- which sources said could be between $500 million and $1 billion -- is uncertain due to global market volatility, but a listing could happen later this year.

The sources declined to be identified because the deal is not public.

"The proposal was to list their logistics business," said a source aware of GIC's plan. "They could do an industrial REIT (real estate investment trust)."

Song Seng Wun, an economist at Malaysia's CIMB, said floating a REIT-like structure will enable GIC to raise funds for new investments, as well as earn fees from outside investors, following in the footsteps of sovereign funds such as Abu Dhabi and China Investment Corp.

"It will deepen the REIT segment in Singapore as well," he added.

Singapore, Asia's third largest REIT market after Japan and Australia, is home to several large industrial REITs including Mapletree Logistics (MAPL.SI), Cache (CALT.SI) and Ascendas (AEMN.SI).

One of the sources said an IPO would include assets in China and Japan that GIC's real estate unit bought from ProLogis (PLD.N), one of the world's largest warehouse owners and developers, for $1.3 billion in late 2008.

IFR Asia had previously reported GIC called in banks before Easter to pitch for a listing of its logistics properties in China and Japan.

JPMorgan and Citigroup are among the banks leading the talks for the mandate, one of the sources said. A third bank may be added, one of the sources said. JPMorgan and Citi declined comment.

The real estate assets span multiple property sectors, including office, retail, residential, industrial and hospitality, according to its web site. (Additional reporting by Daniel Stanton from IFR Asia and Kevin Lim; Editing by Ian Geoghegan and Anshuman Daga)