Despite a sluggish jobs report out of the US and renewed concerns about weaker growth in China, the Asian capital markets had a busy start to the week with two block trades launching after the close on Monday. Bumrungrad Hospital sold its entire 25% stake in Bangkok Chain Hospital, raising Bt4.56 billion ($143 million), and Alliance Global Properties offloaded its remaining shares in Singapore-listed Mapletree Logistics Trust (MLT) reaping total proceeds of S$133.8 million ($105 million).
Both deals came on the back of steady share price gains, but still met with relatively good demand and the Bangkok Chain offering was even upsized by 24%.
Earlier in the day, a group of pre-IPO investors had also launched a fully-marketed GDR offering in Taiwan chip maker Parade Technologies, and Reliance Communications’ subsea cable unit had kicked off the bookbuilding for what could become Singapore’s biggest IPO so far this year.
And last night, Philippine property developer Ayala Land was in the market with a top-up placement of up to $253 million. So, investors looking for ways to increase their exposure as the third quarter gets under way all of a sudden have a fair number of deals to choose from.
Bangkok Chain Hospital
Of the blocks, Bumrungrad’s sale of Bangkok Chain stands out because of its size. Sure, it wasn’t that big in dollar terms, but it is rare to see a 25% stake in a company being sold through an accelerated bookbuild over just a few hours. Most blocks tend to account for no more than 5% to 7% and as trading volumes have slumped amid the challenging market environment in the past couple of months, many blocks have been even smaller than that as sellers have opted for certainty of execution, rather than trying to dribble the shares out in the open market over several days.
Bankers said yesterday that they weren’t aware of any other Thai deal done without any marketing that might have been bigger on a relative basis.
The latest block in a Bangkok-listed company — AIA’s sell-down in 7-Eleven franchise owner CP All on June 29 — accounted for just 1.4% of the company.
Bumrungrad initially offered 401 million shares, or a 20.1% stake, in its smaller competitor, which operates a chain of six private hospitals with a total of 1,620 beds, according to its website. There was also an upsize option of an additional 97.748 million shares, which would take the sale to 25% and allow Bumrungrad to exit in full.
The shares were offered at a price between Bt9.10 and Bt9.40, which translated into a discount of 4.6% to 7.6% versus Monday’s close of Bt9.85. The final price was fixed slightly above the bottom of the range at Bt9.15 for a 7.1% discount, but more importantly the upsize option was exercised in full.
The deal, which was open for a couple of hours immediately after the Thai market closed, saw strong support from domestic investors and about 70% of the shares were placed with Thai accounts, a source said. Looking across both the international and domestic buyers, about 75% of the deal went to long-only funds, with another 21% to 22% going to hedge funds and the rest to retail high-net-worth accounts. More than 40 investors were said to have participated in the transaction.
The deal came as a bit of a surprise, as Bumrungrad bought the stake as recently as March 2011 and was the second-largest shareholder in the stock. Initially there were some speculation that it may try to derive some synergies from it alongside its own bigger hospital business, but Bumrungrad’s CEO said earlier this year that it had no intention of combining the two businesses. Still, most observers probably expected Bumrungrad to hang on to the investment a bit longer, given that it accounted for a quarter of the company.
That said, the Asian hospital sector is in focus right now thanks to the initial public offering of Malaysia’s IHH Healthcare, which has attracted a lot of investor interest and highlighted the growth potential in this industry. Even before IHH hit the market though, Bangkok Chain was performing strongly and, before the deal, the stock was up 44% year-to-date, compared with a gain of just over 16% in the benchmark Thai index. So, one can see why Bumrungrad was tempted to sell.
The stock initially held above the placement price yesterday, but by the end of the day it had slipped to Bt9.05, down 8.1% on the day and slightly below the Bt9.10 where Bumrungrad sold its shares.
The deal was arranged by Credit Suisse and Bualuang Securities.
Mapletree Logistics Trust
Alliance Global Properties sale in MLT was perhaps less opportunistic, although it seems the seller might have been waiting for the share price to close above S$1, which happened on Thursday last week. This stock too has been performing strongly and when the deal launched at about 5.30pm Hong Kong time on Monday, it was up 19% year-to-date — which is quite a lot for a real estate investment trust (Reit). The Singapore Straits Times Index was up close to 12% at the same time.
Alliance offered 139.34 million units at a price between S$0.96 and S$0.98, which translated into a discount of 2.5% to 4.5% versus Monday’s close of S$1.005. According to a source, there was quite a bit of price sensitivity and the final price was fixed right at the bottom for the maximum 4.5% discount.
There was quite good interest though, and deal was covered after about one hour. Citi, which was the sole bookrunner, chose to keep the order books open for another couple of hours though, to allow some of MLT’s existing shareholders in the US a chance to take a look at the transaction. Existing shareholders in Reits are often keen to participate in follow-on offerings to maintain their stake, but since this sale was all secondary units, the interest from the current holders was a bit thinner. However, the source said some existing US accounts did participate.
In all, the deal attracted about 35 investors, including real estate specialists, some long only funds, some hedge funds and some private bank-type accounts that tend to like this type of yield play. The placement price equals a 2012 dividend yield of about 7.2%.
This deal was significantly smaller than the Bangkok Chain offering, at just 5.7% of the company, but it accounted for about 70 days of trading. That suggests that it isn’t easy to buy a meaningful position in this particular stock in the market and some investors likely welcomed the chance to do so through this block.
MLT is one of the largest owners of real estate for logistics and distribution purposes in Singapore and also invests in similar buildings elsewhere in Asia. According to its website, as of the end of March it had 105 properties in Singapore, Hong Kong, China, Malaysia, Japan, South Korea and Vietnam in its portfolio, with a combined value of S$4.1 billion ($3.2 billion). Alliance bought into the company in connection with its IPO in 2005 and has added to its stake a few times since then.
MLT’s unit price fell 2.5% yesterday after the deal, but finished 2% above the placement price at S$0.98.
Ayala Land
Last night’s offering by Ayala Land comprised 530 million shares, or 4.1% of the enlarged share capital. The shares were offered at a price between Ps19.80 and Ps20.20, which equalled a discount of 4.0% to 5.9% versus yesterday’s close of Ps21.05.
Depending on the final price, Ayala could raise between Ps10.5 billion and Ps10.7 billion ($248 million to $253 million). According to the term sheet, the company will use to the money for capital expenditures, to add to its land bank, and for developments under its proposed strategic alliance with the land-rich Ortigas family.
Goldman Sachs, J.P. Morgan and UBS were joint bookrunners, while CLSA was a co-bookrunner.
