The Mainland-based provider of educational services û including foreign language training programmes û has seen its share price rally 182% since it listed on the New York Stock Exchange in early September and this follow-on sale was done primarily to allow pre-IPO investors to cash in some of those gains.
Credit Suisse, Goldman Sachs and Merrill Lynch were joint bookrunners for the offering.
The deal, which comprised 92% secondary shares, came a few weeks before the end of the six-month post-IPO lock-up period, but this was deemed acceptable in return for a concerted and orderly sell-down by the shareholders. A similar early sell-down of 100% secondary shares was completed for Mindray Medical International at the end of January. Only one of the 15 selling shareholders sold its entire stake and there will be a new lockup of 60 days for the company and the selling shareholders following this transaction.
The sale was made up of 7 million ADS, each of which account for four common shares, which were priced at $41.50 apiece. The total deal size rose from early estimates of about $250 million as the share price rallied 27% from the filing on January 19 to last ThursdayÆs record closing price of $42.25, including a 20% gain in the final five days before pricing.
Just under 120 accounts participated in the offer, which was said to have been multiple times covered with little price sensitivity. However, many of the investors who met with the management during the roadshow also decided to buy the stock directly in the market to ensure a sufficient allocation, which helped drive up the share price over the last week. The price did dip 2.1% to $41.35 on Friday in the wake of the sale.
According to people familiar with the offering, the management did 31 one-on-one meetings with investors over the course of the roadshow, which included one day in Hong Kong and four days in the US (in San Francisco, Boston, New York and Baltimore), as well as group meetings.
Given that schedule, it was no surprise that most of the book came together in the US, but there was also good interest from Asian and UK-based investors who already hold New Oriental stock, one source noted.
The sale accounted for about 18.9% of the enlarged share capital before including the greenshoe. The latter could add another 1.05 million ADS and boost the total proceeds to $334 million.
The English training market in China, which amounted to about $1.9 billion in 2004, is expected to double to $3.7 billion by 2010, driven by preparations for the 2008 Olympics. The investor optimism for New Oriental also stems from the fact that it is viewed as a leader in this sector with a well-known brand name that it is in the process of leveraging outside its main business areas in Beijing, Shanghai, Guangzhou and Wuhan.
The sale of $290.5 million worth of American Depositary Shares in New Oriental Education & Technology Group at the end of last week was priced at a tight 1.78% discount to the most recent close as investors continue to have faith in the stock.
The Mainland-based provider of educational services û including foreign language training programmes û has seen its share price rally 182% since it listed on the New York Stock Exchange in early September and this follow-on sale was done primarily to allow pre-IPO investors to cash in some of those gains.
Credit Suisse, Goldman Sachs and Merrill Lynch were joint bookrunners for the offering.
The deal, which comprised 92% secondary shares, came a few weeks before the end of the six-month lock-up period, but this was deemed acceptable in return for a concerted and orderly sell-down by the shareholders. A similar early sell-down of 100% secondary shares was completed for Mindray Medical International at the end of January.
The sale was made up of 7 million ADS, each of which account for four common shares, which were priced at $41.50 apiece. The total deal size rose from early estimates of about $250 million as the share price rallied 27% from the filing on January 19 to last ThursdayÆs (February 8) closing price of $42.25, including a 20% gain in the final five days before pricing.
Just under 120 accounts participated in the offer, which was said to have been multiple times covered with little price sensitivity. However, many of the investors who met with the management during the roadshow also decided to buy the stock directly in the market to ensure a sufficient allocation, which helped drive up the share price over the last week. The price did dip 2.1% to $41.35 on Friday in the wake of the sale.
According to people familiar with the offering, the management did 31 one-on-one meetings with investors over the course of the roadshow, which included one day in Hong Kong and four days in the US (in San Francisco, Boston, New York and Baltimore), as well as group meetings.
Given that schedule, it was no surprise that most of the book came together in the US, but there was also good interest from Asian and UK-based investors who already hold New Oriental stock, one source noted.
The sale accounted for about 18.9% of the enlarged share capital before including the greenshoe. The latter could add another 1.05 million ADS and boost the total proceeds to $334 million.
The English training market in China, which amounted to about $1.9 billion in 2004, is expected to double to $3.7 billion by 2010, driven by preparations for the 2008 Olympics. The investor optimism for New Oriental also stems from the fact that it is viewed as a leader in this sector with a well-known brand name that it is in the process of leveraging outside its main business areas in Beijing, Shanghai, Guangzhou and Wuhan.
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