Lead manager Goldman Sachs has decided not to launch the $150 million offering for Travelsky Technology this year, despite receiving positive market feedback about the company from investors during pre-marketing last week. Key to its decision has been the share performance of China Mobile, which has shed 10.06% over the past two days.
The PRC's dominant wireless operator has come under increasing pressure following indications by China's Ministry of Information Industry (MII) that it is planning tariff cuts across the sector. In Wednesday's trading, the stock fell 6.26% to close at HK$47.10 ($6.04) and today (Thursday), hit a low of HK$43 before closing down 3.8% at HK$45.30.
As one banker puts it, "A lot of investors bought China Mobile paper recently at HK$48 and are facing year-end with virtually all equity markets down. They are the real losers of the year and they're just not prepared to take any more risks in the primary market. It's hardly surprising that the deal isn't going ahead, the launch pad wasn't smooth enough."
To see first Jitong Communications and now Travelsky pulled back at the eleventh hour risks leaving a spectacular year for Chinese equity raising ending on a damp note. Of the record-breaking $50 billion in equity raised from the region during 2000, about 40% has derived from the PRC, whose top ranking companies have taken a quantum leap in the minds of global investors.
Indeed, despite its small size, Travelsky is said to have been regarded as a strong proposition. The company, which is currently owned by China's Civil Aviation Authority (CAAC) and its domestic carriers, runs the country's national ticketing system (GDS) and its front-end portal. Together they enjoy a 99% share of the domestic ticketing market and 70% share of the international market.
