Blocks in Zhongsheng and Alfamart raise $273 million

Existing shareholders in Hong Kong-listed Zhongsheng Group Holdings and Indonesia’s PT Sumber Alfaria Trijaya, better known as Alfamart, were in the market last night raising a combined $273 million from accelerated secondary placements.

The Hong Kong deal was the larger of the two at HK$1.32 billion ($170 million) and followed the same pattern as many of the block trades that were in the market last week – pricing at a fairly tight discount and upsizing the offering in full, indicating a continued appetite for risk and for Asian paper. The seller, for the second time since the Chinese car retailer listed in Hong Kong in March last year, was General Atlantic.

The private equity firm offered 60 million shares with the option to upsize to 80 million shares and was able to sell the full amount, reducing its stake in the company to 7.5% from 11.7%. The shares were offered in a range between HK$16.30 and HK$16.80, which translated into a discount of 3% to 5.9% versus yesterday’s closing price of HK$17.32. The deal was well received and, after just 90 minutes of bookbuilding, it was priced in the lower half at HK$16.45 for a discount of 5%. Morgan Stanley was the sole bookrunner.

According to a source, the deal was multiple times covered by a mix of high quality long-only investors and hedge funds. Asia-based accounts dominated, but a few investors in Europe and the US, including some existing shareholders, also participated.

In October, General Atlantic teamed up with Zhongsheng’s controlling shareholder for a joint placement after their IPO lockups expired. At that time, General Atlantic sold some 24.4 million shares, while the controlling shareholder sold 80 million shares. The placement price back then was slightly lower than last night’s trade, at HK$16.42. The controlling shareholder wasn’t able to participate this time as he was still locked up from the previous trade. No lockup was imposed on General Atlantic after the previous sale, which was jointly arranged by Morgan Stanley and UBS. General Atlantic first invested in Zhongsheng in 2008.

Meanwhile, the controlling shareholder of Alfamart, Sigmantara Alfindo, offered approximately 343.2 million shares in the Indonesian supermarket chain, which represented about 10% of the outstanding share capital. Taking advantage of the fact that investors like both consumer names and Indonesia at the moment, the offering was partly done to realise some profit, partly to help increase the free-float in the stock, which was only about 20% before the transaction. The sale followed on the back of a non-deal roadshow in November.

The shares were offered at a price ranging from Rp2,700 to Rp3,025, representing a discount of 10% to a premium of 0.8% versus yesterday’s close of Rp3,000. The final price was fixed at Rp2,750 for an 8.3% discount and a total deal size of Rp943.7 billion ($103 million).

A large portion of the demand came from long-only accounts, who were perhaps tempted by the sharp gains in Alfamart’s share price. The stock has tripled from below Rp1,000 in July to Rp3,000 right now. There was no information about the level of demand or how many investors came into the deal, although one source acknowledged that it wasn’t a massive book. UBS was the sole bookrunner.