Luye Pharma, which held one of last year's most successful flotations in Hong Kong, has completed its first block trade, netting three of its pre-IPO investors $100 million.
The Government of Singapore Investment Corporation, also known as GIC, and private equity firms CDH Capital and New Horizon collectively sold 86.2 million shares at HK$9.00 per share under the joint leads of UBS and Morgan Stanley.
The shareholders had initially sought to sell the Luye Pharma shares at between HK$9.00 and HK$9.30 per unit, representing a discount range of 3.2% to zero relative to the share's January 14 closing price.
One banker close to the deal said it was one of the tightest discount ranges ever for a healthcare company in Asia.
"We launched at a tight discount and had a big anchor order from a large long-only [investor] at the HK$9 level," the banker told FinanceAsia. This helped to set the eventual price for the block offering of shares in Luye Pharma, which sells more than 50 drugs for oncology, cardiovascular, orthopaedic, gastroenterology and central-nervous system patients.
Heavy demand
Demand was strong for the Chinese pharmaceutical company, which is unsurprising considering its strong recent share price performance -- it has climbed 55% since its initial public offering in July.
The majority of the demand came from existing shareholders looking to top up their shares. "It was mainly anchored and pushed by existing shareholders, particularly IPO participants and holders of the company that have enjoyed the recent gains," he said.
Over 50 lines participated in the book, leaving it multiple times oversubscribed by the time allocations were finalised Thursday morning in Hong Kong. Asian firms made up the bulk of the book, a combination of hedge funds, long-only institutional investors, Chinese-focused funds and international funds.
GIC and CDH each sold 17.5% stakes in Luye Pharma, while New Horizon offloaded 15%. All three remain significant shareholders in the company, although bankers declined to offer current ownership stakes.
Shares were sold in board lots of 500. There is a 60-day lockup in place.
Luye Pharma, which is also backed by Citic Private Equity as well as CDH, New Horizon and GIC, is widely seen as one of last year's most successful Hong Kong IPOs, when it raised $764 million by selling 999.6 million shares at HK$5.92 each, the top of its indicative range at the time.
Investor confidence was boosted by cornerstone support from Value Partners, OrbiMed Advisors, Prime Capital, Trivest Investment, Macquarie Funds and Minmetals Capital, who pledged a combined $280 million.
CDH, Citic and New Horizon in 2012 took majority stakes in the-then Singapore-listed Luye Pharma before taking it private later that year. When it was subsequently floated in Hong Kong some 33.2% of the base offering was made up of secondary shares, rising to 41.9% after a greenshoe option was exercised.
Other block trades
Separately, private equity firm MBK Partners offloaded 13.6 million shares in China New Life Insurance late Thursday under the sole lead of UBS. Volatile market conditions encouraged the issuer to launch the deal at a fixed price of HK$42.34 per unit and close books quickly with just a few orders, allowing the vendor to raise $74 million from the secondary placement, according to a source close to the deal.
The deal was quite small, buoyed by one large anchor investor and a few lines in the book. "Given the volatility in the market because of the Swiss franc move, [the issuer] opened and shut the deal at a fixed rate," a source close to the deal said. "[We] got a few investors and opened and shut quickly."
Markets were rocked Thursday when the Swiss National Bank scrapped its minimum exchange rate against the euro, effectively pulling the rug on an important policy tool designed to protect its economy from the eurozone's sovereign debt crisis.
