Casetek Taiwan

Casetek shareholder raises $101 million from block trade

The undisclosed seller moved to lock in gains after an 82% rally in the share price since Casetek’s Taiwan IPO in January.

An unidentified shareholder of Taiwan’s Casetek Holdings sold a 5.8% stake in the company on Thursday evening, raising NT$3.02 billion ($101 million).

Casetek, which makes metal casings for Apple’s iPad and iPad Mini as well as for other tablets, notebooks and desktops, listed on the main board of the Taiwan Stock Exchange just last January. This sell-down was really the first time that international investors got a chance to buy into the stock in bulk.

As is often the case with domestic Taiwan listings, the share price shot up on the first day of trading and has held up well at those higher levels ever since. It closed at NT$163.50 on Thursday, which was 82% above the NT$90 IPO price and only 8.1% below the all-time high of NT$178 that it hit in early May.

The deal attracted a select group of fewer than 20 investors, according to a source, but as most of them submitted sizeable orders the transaction was well covered when the order books closed at around 8pm Hong Kong time.

This allowed the bookrunners to fix the price close to the mid-point of the indicated range, for a 6.1% discount to the latest close. However, in order not to overwhelm the market with too much paper, they chose not to exercise the upsize option, which could have increased the deal size by up to $30 million. According to Bloomberg data, the base deal already accounted for between 12 and 15 trading days based on the average daily trading volume over the past one to three months.

The buyers included a good mix of long-only investors and hedge funds, with both international and domestic accounts coming in on the deal, the source said.

The base deal was made up of 19.7 million secondary shares offered at a price between NT$152.06 and NT$155.33. Based on the latest closing price, that translated into a discount of 5% to 7%.

Late on Thursday night investors were told that the final price would be fixed at NT$153.50, representing a 6.1% discount.

The seller wasn’t disclosed, but based on the number of shares sold it could only have been either Casetek's parent company, Pegatron Corp, or a company named Bright Profits Investment. Pegatron, which designs and manufactures desktops, laptops, smartphones, tablets, games consoles and LCD TVs for a number of companies including Apple, owned about 68.2% of Casetek before this transaction, while Bright Profits owned 8.45%, according to Bloomberg data. No other shareholder held enough shares to sell a 5.8% stake.

The vendor has agreed to a 45-day lock-up on its remaining shares.

Casetek sold about 24.8 million shares in its January IPO, raising about $75 million. That deal, arranged by Grand Cathay Securities, accounted for just 7.3% of its enlarged share capital.

The share price rally since then has increased the value of the company quite substantially and it now has a market cap of approximately $1.8 billion. It has also attracted the attention of research analysts at a couple of international banks – Goldman Sachs and Macquarie – which has likely helped raise the company’s profile among international investors.

Analysts are generally positive on the stock. According to Bloomberg data, nine of the 11 analysts who follow the company have a “buy” recommendation on the stock, while the other two (including Goldman) are “neutral”.

This is the first block trade (sell-down by an existing shareholder) in Asia ex-Japan in three weeks, as volatile markets, uncertainty about China’s economic performance, and the ongoing earnings season have kept primary market activity to a minimum. Casetek’s share price performance on Friday is therefore likely to be watched closely, both by investors and by other potential sellers. If it holds above the placement price, it could give other shareholders confidence to go ahead and sell as well; a negative day could have the opposite effect.

Prior to this deal, the most recent block trade was the $70 million sell-down of shares in pharmaceutical company Sino Biopharmaceutical by chairman Tse Ping on July 24, after their price had doubled in the past 12 months. The share price held above the placement price for the first eight sessions after the deal, but has come under some pressure since then. On Thursday the stock fell 7.5% and closed 5.2% below the placement price.

The most recent block trade worth more than $100 million took place a few days before that, on July 18, when San Miguel Corp reduced its stake in Manila Electric Co (Meralco) with a $400 million deal. Meralco’s share price has held above the placement price ever since the transaction and on Thursday finished 7.8% above it.

The Casetek block trade was arranged on a sole basis by Nomura.


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