Ctrip: return trip to international equity markets

Chinese online travel agency completes secondary offering on the Nasdaq.

Ctrip returned to the international equity markets on Thursday October 21 with a $42.63 million sale of secondary shares. The deal was well-timed, coming into a market with high earnings expectations from internet search engine Google and ahead of an IPO by rival operator eLong.

Under the lead of Merrill Lynch, (also the IPO bookrunner) a group of existing shareholders divested 6.6% of Ctrip's outstanding share capital in a 1.05 million ADR deal. The biggest vendor was the Carlyle group, which sold 350,000 shares.

Books were opened in Asia's morning (Thursday) at $40 to $40.75 per unit and closed just ahead of trading in the US later the same day. Pricing was completed towards the aggressive end of the indicative range at $40.60 per unit. This represented a 4.7% discount to the company's spot close on Wednesday and 12 days trading volume.

The main hurdle the deal faced was the stock's trading level, just off a 52-week high and more than double its IPO price of $18 per unit last December. The day before the deal launched (Tuesday), the stock spiked a further 5.5% before coming down 1% on Wednesday.

On Thursday it jumped a further 1.6% before dropping 2.3% on Friday to close at $42.26. At this level it is trading at a lofty 35 times 2005 earnings and 50 times 2004 earnings.

Books for the deal are said to have closed about two times covered, with participation from just over 30 investors. About 20% of accounts were existing holders, although specialists believe that most of the original IPO investors have already cashed out at a profit.

¬ Haymarket Media Limited. All rights reserved.
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