An increased Bt32 billion ($807 million) equity offering by Bangkok Bank was completed after Friday's close via lead manager Morgan Stanley. The deal size was raised from Bt28 billion after the international order book closed seven times oversubscribed. There is also a greenshoe for a further 15%.
Of the 384.3 million shares on offer, international investors have been allocated 181.8 million at an issue price of Bt88 per share, while domestic investors will receive 202.5 million at Bt79 per share. The domestic offering will run across Monday and Tuesday.
The international tranche was priced at a 4.3% discount to the stock's foreign close of Bt92. Observers report little price sensitivity and an order book of over 150 accounts. Several investors are said to have placed orders for more than $100 million and about 50% are new to the stock.
By geography, the book split 48% Asia, 28% Europe and 24% US.
The domestic book, by contrast, is said to be showing slightly more price sensitivity and the local offering has consequently been priced at a slightly more generous 5.4% discount to the stock's Bt83.5 local close.
Since the transaction is an all new share offering, there is no net increase to the foreign shareholding limit, which stands at 48.8%. This means that all the shares have full voting rights unlike those potentially housed by the bank's Non Voting Depositary Receipt (NVDR) facility, which can absorb future foreign buying that breaches the limit.
Pre greenshoe, the transaction will increase Bangkok Bank's issued share capital by 26% and although news of the dilution initially pushed the stock down 7% it has since tracked the overall Thai market. Indeed, it is now back to where it was at the beginning of pre-marketing after re-tracing slightly and then clawing back its losses.
The biggest one-day jump was Thursday, when the stock closed up 11% after hedge funds sensed they would receive a small allocation and started covering their shorts.
Bangkok Bank is currently trading at about 1.94 times 2003 book, while its main domestic rival Kasikorn is trading at about 2.25 times. This valuation differential stands at the same level as the start of pre-marketing.
Commenting on the deal one observer says, "We didn't find investors were any less interested because it's the end of the year and they want to shut their books up. They do probably have limited bandwidth at the moment, but are using it to look at strategic plays like Bangkok Bank and China Life. A faster money trade like a placement would definitely be more difficult."
And he adds, "Interest in this stock reflects a broader macro theme about Thailand. Once investors looked at the equity story they could see the capital raising made sense. It benefited from the fact that big global funds are looking to re-weight their portfolios towards Asia."
Proceeds are being used to retire expensive hybrid capital undertaken at the height of the financial crisis. The bank has Bt46 billion ($1.15 billion) outstanding. The securities, which fall due in April 2004, carry coupons around the 11% level.
And the capital raising has been welcome by analysts as well as investors. In a research note published last Friday, UBS wrote, "We estimate that with the new capital, Bangkok Bank's core tier 1 ratio should rise from 2.9% in YE02 to 8.7% in YE04. As a result, we believe that Bangkok Bank should be able to sustain annual net loan growth of at least 7% from 2004 to 2006 and still have the flexibility to expand its other financial services related operations."