Following the success of an earlier placement in May, the parent of red chip China Travel International Investment launches a new deal.
With BNP Paribas Peregrine as lead manager, China Travel Services Hong Kong opened books for a 200 million share deal at Asia's close yesterday (Monday). Pricing was completed after US books closed at 3am the following day, with a total of 220 million shares (including greenshoe) priced at HK$1.46 per share.
Raising HK$321.2 million ($41.2 million), the deal was priced at a 7% discount to spot and was said to have attracted about 70 institutional accounts and a number of corporate investors. Bankers report that final allocations were split 50% Asia, 40% Europe and 10% US. About 30% of investors were said to be new to the stock.
"The deal was successful because sentiment is still quite positive towards Hong Kong/China stocks," one observer comments. "Fund managers are getting ready to increase their weightings and they like this stock because it has restructured itself away from being a diversified red chip with power plants and toll roads to a pure tourism and leisure play. It has also outperformed the market by about 30% this year."
At the same time as the company sold secondary shares into the market, it also exercised a convertible in its subsidiary representing a further 427 million shares. The net result of both transactions was that the parent's ownership fell marginally from 60.32% to 59.6%.
The convertible was issued by the subsidiary to pay for the injection of an overseas travel agency business and a Macau hotel. Shares were exercised at HK$1.10.
In May, the company also sold 200 million secondary shares to third party investors at HK$1.6435. This represented a slightly slimmer 5% discount to spot.
