Hong Kong and China may have been on holiday for Chinese National Day, but there was still quite a lot of Asia-related equity capital markets activity as the fourth quarter kicked off on Tuesday.
In Malaysia, Westports Holdings priced its initial public offering at the top of the range to raise M$2.03 billion ($624 million) in the country’s largest IPO so far this year. The M$2.50 price was no surprise as more than 80% of the deal had been tied up with ethnic Malay investors and cornerstone at that level before the order books opened and the portion left for other international investors was significantly over-subscribed.
In the Philippines, casino operator Travellers International Hotel Group firmed up plans for its pending offering and told investors it aims to raise about $400 million pre-greenshoe. It expects to launch the domestic roadshow on Friday and the order books will open when the international roadshow starts next Monday.
And in the US, Qunar, which operates a Chinese search engine focused on the travel industry, filed an application for a $125 million IPO on the New York Stock Exchange. If successful, this will be the largest Chinese listing in the US since Chinese online video company Tudou raised $174 million in August 2011.
Since then, US investors have been rather cool towards Chinese stocks amid a series of accounting scandals, some proven and some alleged, but in the past few months the sentiment towards Chinese internet companies in particular has improved significantly. Qunar, which is 61% owned by Nasdaq-listed Chinese search engine provider Baidu, is no doubt trying to take advantage of this.
Goldman Sachs and Deutsche Bank will arrange the deal, with Stifel joining them as a passive bookrunner.
Meanwhile, on Monday this week, NW Hotel Investments posted an updated prospectus on the Hong Kong stock exchange website, suggesting it is getting close to launching its IPO. The hotel-focused trust, which is a spin-off from Hong Kong-listed New World Development, was initially planning to launch the deal in June, but given the sharp sell-off in global equity markets at that time it chose to hold off.
New World said in an announcement that the final timetable hasn’t been decided yet but it has set October 16 as the new record date for determining how many units its existing shareholders will have a right to buy through the preferential portion of the upcoming IPO. Hence, it looks likely that the deal will launch in the next week or two.
This comes after Nexteer Automotive priced its re-launched Hong Kong IPO over the weekend to raise HK$2.02 billion ($260 million). The Michigan-based steering and driveline supplier went a step further than NW Hotel and actually launched a deal in June, but was forced to call it off before pricing after failing to secure enough orders amid the severe market correction.
The company, which was acquired by a Chinese state-owned enterprise in 2010, re-launched the deal at a slightly higher price range and valuation, but fixed the final price towards the bottom of the range at HK$2.80. This is equal to a 2014 price-to-earnings multiple of 6.4. The shares had been offered between HK$2.60 and HK$3.57.
Westports Holdings
Westports handles container shipments as well as conventional cargo out of Port Klang, a deep natural harbour that is the closest port to Kuala Lumpur and the second busiest port in Southeast Asia after Singapore. It attracted quite a lot of international interest as there is no other big listed Southeast Asian port for investors to buy.
The company also counts both Hutchison Whampoa and Khazanah among its current shareholders, which would have helped boost the interest among other investors.
A source said international investors accounted for about 53% of the institutional demand and were allocated about 70% of the institutional tranche. Even including the 10% overallotment option this portion still only accounted for about $90 million, however, which is why it ended up being so heavily subscribed – market talk suggested it was more than 10 times covered with hardly any price sensitivity.
However, some international investors chose not to participate in the deal at all because there were so few shares to go around, sources have said.
Of the remaining portion, about $301 million worth of shares will go to ethnic Malay investors (also known as Bumiputeras), while Malaysian retail investors and company employees will get about $78 million worth. The nine cornerstones have committed to invest a combined $261 million.
Among the cornerstones, asset manager Permodalan Nasional Berhad (PNB) made its investment through the Bumiputera tranche, which is why the numbers don’t quite add up.
The source said the majority of the institutional tranche, or about 75%, was allocated to long-only funds with the top-10 accounts getting about 40%. The concentration to the top accounts indicates that the bookrunners tried to create some demand tension. In other words, they wanted to ensure that investors who received shares got a meaningful enough allocation that they will want to add to their position in the aftermarket, rather than to sell it.
The deal comprised 813.19 million secondary shares, which together accounted for 23.8% of the outstanding share capital. They were offered in a range between M$2.30 and M$2.50.
Hutchison, Khazanah and the Gnanalingam family (the controlling shareholder) all sold down their stakes through the IPO. At the time of listing, the family will own 46.8%, while Hutchison will hold 24.4% and Khazanah about 5%.
Credit Suisse, Goldman Sachs and Maybank were joint global coordinators and bookrunners for the deal, while Bank of America Merrill Lynch, HSBC and RHB Capital were joint bookrunners.
Travellers International Hotel Group
According to a preliminary term sheet sent to investors yesterday, Philippine-based Travellers will aim to sell approximately 1.57 billion new shares through the IPO, which is equal to about 12% of its enlarged share capital.
Seventy percent of the shares will be targeted at international investors, while the remaining 30% will be offered to domestic accounts. The price range won’t be set until just before the domestic roadshow starts on Friday as the bookrunners want to avoid getting caught out by the volatility in the exchange rate, but the term sheet noted that the expected deal size will be about $400 million, or $460 million including the 15% greenshoe.
The company, which is a 50-50 joint venture between the Alliance Global Group of the Philippines and Genting Hong Kong, first flagged the IPO in April when it said it intended to raise about $500 million. It initially tried to come to market at the end of June, but decided to postpone the deal after feedback from investors suggested it wouldn’t be able to achieve its targeted valuation.
Travellers operates the Resorts World Manila casino, which has been open for business since 2009, but needs capital for its new Resorts World Bayshore project in Manila’s Entertainment City gaming hub.
The pricing is expected on October 17 and the trading debut is scheduled for November 5.
Bank of America Merrill Lynch, CIMB, Maybank, Religare and UBS are joint global coordinators and bookrunners for the IPO, while CLSA, Credit Suisse and Morgan Stanley will act as co-bookrunners. The domestic lead underwriters are BDO, Maybank and UBS.
NW Hotel Investment
The business trust-like vehicle will include three hotels – the Grand Hyatt Hong Kong, the Renaissance Harbour View Hotel and the Hyatt Regency TST – valued by Savills at a combined HK$21.05 billion ($2.7 billion). This is in line with a HK$21.4 billion valuation when it was aiming to go public in June.
The trust was previously seeking to sell about 43% of its units to public investors before any exercise of the greenshoe and sources said on Monday that the structure of the deal hasn’t changed. Based on the earlier information, New World Development will own 36.5% at the time of listing, while Chow Tai Fook Enterprise, the investment vehicle controlled by New World’s chairman Cheng Yu Tung, will own another 20.5%.
The financials have been updated to include year-end numbers (to June 30), but the new numbers are in line with earlier projections. The valuations of other hotel-focused trusts have improved since June, however, and that could allow NW Hotel to offer its own units at a slightly higher valuation as well. The trust was earlier expected to raise between $700 million and $800 million.
New World Development reiterated on Tuesday that its existing shareholders would be able to buy one unit in the trust for every 80 shares they own in the parent company through a preferential offering.
According to sources, bankers are having an ongoing dialogue with investors about the deal but will not be doing a new round of pre-marketing, which means they can launch at short notice when they feel there is a market window.
Deutsche Bank, HSBC and JP Morgan are joint global coordinators and bookrunners, while BOC International and Standard Chartered are joining them as bookrunners.
Nexteer Automotive Group
Nexteer had secured enough demand from institutional investors to cover the entire deal plus the 15% greenshoe before launch and chose to keep the order books open for just three days.
The buyers included hedge funds and high-quality long-only funds out of Asia and Europe, and on the final day there were a couple of sizeable orders from the US. The company had also secured a $25 million cornerstone commitment from the investment arm of Dongfeng Motor.
Retail investors were not particularly keen, however, and the 10% retail portion was less than two times covered, according to a source. Many retail investors seem to have preferred Forgame’s $206 million IPO, which was in the market at the same time. The Chinese gaming company ended up with its retail tranche more than 300 times covered.
Nexteer is due to start trading on October 7. BOC International and JP Morgan are joint bookrunners.
