The sale, which was completed after the market closed yesterday, was done at a tight 1.1% discount to the closing price which allowed the seller to raise W463.1 billion ($498 million). The price was fixed at the top of the W45,700 to W46,450 offering range after four hours of bookbuilding.
A source close to the deal said investors were positive on the company partly because it is trading at an attractive valuation relative to other Korean financial companies and banks, and partly because this transaction will remove an overhang that has plagued the stock for some time.
Subscription levels werenÆt available last night, but more than 65 investors came into the deal, which was said to have seen good participation from South Korean accounts. About 75% of the demand came from Asia, including Korea, while the rest was generated by European and some US accounts, according to the source.
The quality of the orders was also said to have been high, and with most of them coming in at strike, the bookrunner was able to push the final price to the top of the range, even though this meant a very tight discount û especially for a deal this size.
At close to $500 million, this is the largest sell-down in Korea year to date where a portion of the deal hasnÆt been bought by a strategic investor and according to bankers also one of the largest in a Korean company ever. In February, Korea Deposit Insurance Corp, or KDIC, sold W1.118 trillion ($1.21 billion) worth of shares in Shinhan Financial Group at a zero discount, but 88.5% of that deal went to a group of 17 strategic investors.
In terms of relative size the transaction of 9.97 million Hana shares isnÆt that large, however, as it accounts for only about 14-17 days worth of trading volume, depending on what historical period one looks at.
Allianz had been expected to sell its remaining stake in Hana for some time after its 50-50 insurance joint venture with the Korean bank broke down earlier this year as Allianz decided it would focus its entire resources in Korea on its wholly-owned life insurance unit instead. Last month the pair announced that Hana would buy out its former partnerÆs entire stake in Hana Life Insurance to formally end the strategic cooperation between the two.
ôAs the strategic partnership wasnÆt going forward, there was no point for Allianz to keep its stake,ö one observer notes. With the overhang gone, he adds, it should be possible for Hana to narrow the discount versus its domestic peers, which explains why people were happy to buy even at a discount just above 1%.
The third largest commercial banking group in South Korea, Hana trades at about 1.1 times its estimated book value, compared with an average 1.45 times for the Korean financial sector and as much as 1.7 times for the top-ranked player in the sector. HanaÆs share price has come off from a 2007 high of W54,400 on February 26 and fell below W48,000 in early May. Yesterday (June 11) it closed at W46,950 after losing 0.1% during the session.
Allianz was the third largest shareholder in the company behind Temasek and Goldman Sachs, which hold 9.6% and 8.7% respectively, according to Dow Jones Newswires.
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