Korea Exchange Bank sold 4.35 million shares in Hana Financial Group at the second attempt on Friday, raising more than $160 million in the process after a first effort was botched on Wednesday.
FinanceAsia understands that shares were initially offered at between 40,937 won and 41,350 won ($38.23 and $38.62) when the books opened Wednesday. A 2% discount would have drawn sufficient demand, bankers said, but KEB insisted on a discount cap of 1%.
“We launched the day before, and the price was a big leap of faith, and we knew it,” a banker close to the deal told FinanceAsia on the first block trade attempt late Wednesday. “We said we’d try our luck, but unsurprisingly, it wasn’t working.”
The deal was yanked early Thursday as a result.
But after stock prices held steady bankers involved in the deal made a second stab at the block sale. They identified a select few global institutions who agreed to purchase 4.35 million shares at 40,800 won a share, a 1% discount to the March 6 close of 41,200 won. As a result, KEB managed to raise $167 million, just under its goal of $168 million.
“It was botched the night before but resurrected the next day. We found there was another way to get it done,” the banker close to the deal said. “It was a very tight book with high quality, high conviction global funds that were prepared to step in a club deal form.”
Morgan Stanley and Citi acted as joint bookrunners, with Hana Daetoo Securities handling the co-manager role.
In October, KEB sold two-thirds of its stake in Hana Financial in a block trade worth $321 million. That was covered more than one-and-a-half times and attracted 40 investors, with the price fixed at the bottom of the indicated range. KEB sold 8.4 million shares, which at the time, represented 2.9% of Hana’s total issued share capital.
Hana Financial shares are down 6% so far this year.
The financial group, one of Korea’s largest banks, reported earnings last week, with its fourth quarter net income plunging 56% to 171.7 billion won ($160.3 million) from 390.3 billion won in the third quarter.
Its 2013 net income meanwhile totaled 1.136 trillion won compared with 1.15 trillion won ($1.07 billion) in 2012.
