First Pacific Company, a Hong Kong-listed investment and management firm, yesterday launched a rights issue that is expected to raise approximately $282 million. The company, which has operations in telecommunications, infrastructure, foodstuffs and natural resources, is raising capital to develop its mining business in the Philippines and Southeast Asia.
The company shall issue between 643 million and 672 million rights shares at a ratio of one rights share for every five existing shares held. The rights shares are equal to approximately 20% of the company's existing share capital and 16.7% of the enlarged share capital.
Anthoni Salim, First Pacific's chairman and controlling shareholder, has agreed to take all the rights shares that his 44.2% stake entitles him to.
The shares will be sold at HK$3.40 apiece, which is equal to a 35.8% discount to Tuesday's closing price of HK$5.30 -- the last traded price before the deal was announced. It also represents a 31.7% discount to the theoretical ex-rights price (Terp) of HK$4.98 and a 35.6% discount to the average closing price in the 10 days before the deal was announced.
The discount to Terp is similar to the discount for many of the other recent Asian rights issues. Genting Singapore for example, was looking to raise $1.14 billion at a 32.8% discount to Terp through a rights issue that closed earlier this week. Genting has announced that the deal was oversubscribed, but hasn't yet disclosed the final subscription numbers. Among other deals, Keppel Land's $478 million rights issue came at a 27.6% discount to Terp, while Starhill Global Real Estate Investment Trust raised $234 million through a rights issue at a 29.3% discount.
When completed, First Pacific's rights issue will be the largest by a Hong Kong-listed company so far this year. Singapore, Malaysia and South Korea have dominated the rights issuance with several deals close to, or above, $1 billion. While there have been 40 rights issues in Hong Kong this year, according to data from Dealogic, the size of these deals has been much smaller; the second largest was a $244 million deal by Fortune Real Estate Investment Trust (which is listed in Singapore, but comprised of Hong Kong assets), but more representative of the pack are smaller deals by companies like Singamas Container Holdings, which in April raised $63 million.
"We intend to apply the net proceeds in pursuit of First Pacific Group's investment strategies in mining in the Philippines and in Southeast Asia and, if suitable opportunities arise, in infrastructure assets in the Philippines," said Manuel Pangilinan, First Pacific's managing director and CEO, in a written statement.
First Pacific acquired its mining business in the Philippines, Philex Mining Corporation, in October last year.
Most of the company's other principal investments are also in the Philippines: a majority stake in Metro Pacific Investments; and a large interest in Philippine Long Distance Telephone Company. It also controls PT Indofood Sukses Makmur in Indonesia.
The joint underwriters for the deal are Standard Chartered's Cazenove Asia unit, Credit Suisse and HSBC. The subscription period is expected to commence on November 6. The company shall announce the results on November 26 and the transaction is expected to be completed by December 1.
