The Banpu Public Company and Banpu Power Company have sold their stakes in Thailand’s Ratchaburi Electricity Generating Holdings, raising a combined Bt6.68 billion ($223 million). The sale was completed after the Thai market closed yesterday and, according to a banker, marked the largest ever overnight placement in Thailand.
The deal came as most Asian markets ended a four-day losing streak and headed higher again, although Ratchaburi’s defensive nature as an electricity producer offering a steady income and a high yield may also have attracted investors precisely because the equity market outlook has become a bit more uncertain over the past couple of weeks. Thailand is also the second best performing stock market in Asia this year after Indonesia, and bankers say investors who have missed the big run-up are looking for ways to increase their exposure. Based on yesterday’s closing price, the stock pays a divided yield of about 6.1%.
According to a source, the deal was covered in under 30 minutes and attracted about 50 institutional investors, with about half of the demand coming from international accounts. Asian and Asean funds were well represented but the buyers also included global funds, insurance funds, diversified funds and even some fixed-income funds. About a quarter of the deal also went to Thai retail investors through local brokerages. When the order books closed after about three hours, the deal was about two times covered.
However, investors weren’t prepared to buy at any price and the demand was very price sensitive – which perhaps isn’t too surprising considering that the offer accounted for about 15% of the company and the stock is very illiquid. Based on the average daily volume in the past three months, the transaction accounted for a full 145 days of trading.
Hence the price was fixed at the bottom of the indicated range at Bt33, representing a 10.2% discount to yesterday’s close of Bt36.75. The shares were offered at a discount ranging from 0% to 10.2%. The fact that the range started at a zero discount was in line with a recent practice in Thailand and doesn’t suggest that the sellers actually hoped to achieve that. The past three placements at least have had price ranges starting from a zero discount.
The Banpu group, a Thai power producer and coal miner, offered 202.4 million shares, which represented their entire combined stake in Ratchaburi. The group has been offloading some non-core holdings lately, and in early September also sold part of its Indonesian subsidiary PT Indo Tambangraya Megah (ITMG) through another block trade, reducing its stake in that company to about 65% from close to 74% and raising $392 million.
Banpu told investors last night that the proceeds from the Ratchaburi divestment would be used for general corporate purposes. However, some of the money raised is no doubt going towards Banpu’s $2 billion acquisition of Australian coal miner Centennial Coal, which is being carried out through a general offer to minority shareholders. When the offer closed on October 12, Banpu controlled 98.5% of the outstanding share capital (it had 20% before launching the offer) and is now in the process of acquiring the remaining shares. Centennial is expected to be delisted from the Australian Stock Exchange by the end of this month, according to an investor presentation posted on Banpu’s website.
The block trade was arranged by Bank of America Merrill Lynch and Phatra Securities.