Belle management sells $301 million worth of shares

The 3% block is covered in 30 minutes, but prices below the mid-point for a 7.6% discount.

A group of management shareholders in shoe manufacturer and retailer Belle International Holdings yesterday raised HK$2.33 billion ($301 million) from a block trade that was well received by investors.

Launched shortly after 5pm, Hong Kong time, the deal was covered within 30 minutes and attracted close to 70 investors, which is notable given that we are only days away from year end and many institutional investors were supposed to have closed their books on 2009 already. After a strong rebound in afternoon trading, Belle also closed just off a 52-week high of HK$10.04 that it reached on Tuesday.

However, the shares were offered at a sizeable discount to compensate for the year-end reduction in liquidity, which would have increased the attractiveness quite significantly -- particularly if one is to believe analyst projections that Chinese consumption will be a major theme next year. Belle, with its leading market position, strong brand name and widespread distribution, would be a good way to play that theme, especially since it is also quite a liquid stock.

The shares were offered in a range between HK$9.11 and HK$9.40, which translated into a discount between 5.6% and 8.5% versus yesterday's close of HK$9.96. The price was fixed below the mid-point at HK$9.20 for a discount of 7.6%.

The sellers, which comprised four different entities holding stock on behalf of the management, sold 253.25 million shares, which accounted for about 3% of the share capital, 6% of the freefloat and about 15-20 trading days. One of the entities is selling all its shares, but the other three will still hold a combined 47.7% stake in the company after this transaction.

According to a source, the deal was multiple times covered with more than half the demand coming from long-only investors. Asia accounted for about three-quarters of the order amount with most of the rest generated out of Europe. US investors weren't targeted since the books closed at 6.15pm Hong Kong time -- well ahead of when most US investors would come into work -- although a few US names did participate.

Morgan Stanley was the sole bookrunner for the block, which if common logic prevails, should be the last Asian placement this year.

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