In the face of difficult market conditions, the deal was priced almost at the very bottom of its indicative range and slightly scaled back in size to ensure a full order book. Led by ING Barings, the company raised $56.4 million rather than the $80 million it had been hoping for and reduced a greenshoe consisting of five million old shares to one million.
In total, the company offered 25 million new shares, where five shares equal one DR unit. Pricing at $11.27, represents to a 9.9% discount to a 30 day average (0% to 10% indicative) and a 16% discount to spot. With fees totalling 3%, ABN AMRO was co-lead, with Credit Lyonnais, National Securities and Nomura as co-managers. There is also a one million share greenshoe.
Bankers report a total order book of about 50 accounts, with strong representation from hedge funds and a smattering of solid US institutional names, a number of whom came in right at the last moment. Geographically, orders were said to be split about 40% Europe, 30% Asia and 30% US.
"The book was covered, but accounts did get pretty full allocations," says one banker. "It built very slowly, but we got some good orders out of the US after the completion of one-on-one presentations on Thursday."
For most other bankers, the fact that the first in a very long pipeline of prospective issues got completed at all was something of a relief. Indeed, lead officials state that the long queue was one of the main factors impacting investors' reaction to Premier.
"It was a slow process and the enormous pipeline was an issue," says one. "Investors gave us the impression that they will only be going for the huge issues like UMC, those that have something unique to offer, or failing that those which are very attractively priced."
"With Premier," he adds, "we also had to deal with the fact that the Taiwan market fell another 3.5% on the day of pricing and news was filtering out about low subscription levels for Chunghwa Telecom's retail IPO. We also faced investor resistance because Premier's share price has performed so strongly over the past six weeks."
Since the beginning of August, the company's share price has climbed 50% closing Thursday at NT$87.5.
