In Hong Kong, the chairman of Gome Electrical Appliances Holding raised HK$1.25 billion ($160 million) by selling 140 million shares at an 8.7% discount to the latest closing price. The placement had been anticipated after Chairman Wong Kwong-yu sold his remaining 35% stake in Gome Appliance to the listed company last week. The purchase was partially paid for with Gome shares and resulted in GomeÆs free float falling below the required 25%.
This transaction will increase the free-float to about 30.4% and see WongÆs stake in the company fall to about 69.6% from 75.67%.
In Korea, Posco pocketed W121.7 billion ($127 million) from the sale of 649,927 shares in SK Telecom at a 2.5% discount to yesterdayÆs closing price.
The steelmaker has been disposing non-core assets as part of a more than year-long exercise to improve its capital management, which has also included share buybacks and an increase in dividends. In December it sold a slightly larger W197 billion stake in SK Telecom.
Posco still holds 2.3 million shares in the mobile operator, which gives it a stake of about 2.8%, according to Bloomberg data.
Booming
Hong KongÆs Hang Seng Index rallied 1.9% yesterday to its highest close in five and a half years and recorded its most active trading day since the government intervention during the financial crisis with HK$45.97 billion ($5.9 billion) worth of stock changing hands.
Gome jumped 11.4% to a 21-month high of $9.75 amid a rush for mainland retail stocks, which took its accumulated gains so far this year to 85.7%.
The Gome placement was initially offered to investors at a slightly smaller size of 130 million which would have raised about $154 million at the upper end of the HK$8.90 to HK$9.20 price range. The range represented a discount of 5.6-8.7% to ThursdayÆs close.
The price ended up being fixed at the bottom end of the range, partly to account for yesterdayÆs sharp jump in the share price. But according to people familiar with the transaction, the fact that the stock is quite volatile - double digit percentage movements in a single day is no rarity - also played a role.
Citigroup was sole bookrunner on the Gome deal, which was somewhat surprising after ABN AMRO Rothschild has arranged four transactions for the company and its chairman in the past 22 months, including the share price-boosting convertible bonds and warrants that Gome sold to private equity firm Warburg Pincus in February.
ABN and at least one other bank did approach Wong with proposal for a placement following last weekÆs sale of Gome Appliance, according to bankers and the final selection on the mandate was believed to have come down to price.
The order book was about 1.3 times covered with 27 accounts participating, according to a source. And despite the current high share price, long-only funds were said to have bought about 62% of the deal, while hedge funds took the rest.
Approximately 60% of the order volume came from Asia, with offshore US accounting for 32% and Europe for 8%.
Otherwise engaged
ABN AMRO Rothschild , meanwhile, was busy arranging the SK Telecom sale together with UBS.
The shares accounted for close to 0.8% of the company and were sold at W187,200 apiece after being offered to investors in a range between W186,240 and W192,000. The upper end of the range was equal to ThursdayÆs close, while the lower end represented a 3% discount.
The shares were only offered to domestic institutional investors since the foreign ownership limit had already been reached and the whole deal went to only 15-18 accounts, according to people familiar with the transaction. The book was said to have been 1.2-1.3 times covered.
From the perspective of the share price, the timing was not quite as perfect as for the Gome sale, but SK TelecomÆs share price did rise 0.3% yesterday, which left it up 6.1% year-to-date. The stock is still below its high of W204,000 that it reached at the end of February, however.
The Kospi index edged up 0.6% to 1,397 points, which took it to within 30 points of its all time high of 1,426 that it hit in mid-January. Sentiment for the Korean market has been improving since the start of the second quarter after 2.5 months of consolidation.
Posco officials have earlier said that the company intends to sell all its remaining shares in SK Telecom as the investment is not related to its core steel business. Posco received 5.9 million shares in the mobile operator in exchange for its shares in Shinsegi Telecom when the latter was taken over by SK Telecom in 2000.
SK Telecom also owns a 2.85% stake, or 2.5 million shares, in Posco.
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