With Goldman Sachs as sole bookrunner, 13 million ADS units were divested at $35.78 each, a 7% discount to the stock's Won43,350 close in Korea and a 0.6% discount to the ADR's $36 close in New York. One ADR equals one share.
The most striking aspect of the $465 million deal was the increase in the base issue size, the largest on record for an ADR transaction. Since there was no US SEC filing, Goldman had flexibility to meet demand as it saw fit and having opened books with a 7.65 million ADR issue plus a 1.27 million unit shoe, it then upsized it by 41% after books close between two and three times covered.
Some 100 accounts were reported to have purchased the transaction with a rough geographical split, which saw 50% placed in the US, 25% in Europe and 25% in Asia.
Completion of the transaction sees its stake in the bank drop from 5.3% to 1.1%, in the process removing an overhang from the share price. Its previous sale of stock came in June 2002 when it raised $633.6 million from the sale of a 3.46% stake at a 1% discount to the stock's $48 close.
A 9.72% stake had originally been purchased in 1999 when it acquired 20.449 million share for about $300 million and $200 million worth of convertible stock due 2005, equivalent to nine million shares on full conversion. Contrary to market speculation, observers say there is no correlation between the sale of this stake and an announcement that the private equity arm is in negotiations to purchase a 24% stake in Kyobo Life off Daewoo International for about $250 million.
Timing of the deal was driven by a recent spike in the bank's share price, which is up 7.98% on the year. It is, however, significantly further up from its March/April lows of Won30,000 when credit cards problems within the Korean banking sector were under the spotlight.
The government is also hoping to sell its remaining 9.3% stake in the bank and although government officials have said that they are hoping to complete it by the end of the year, a share price target of Won53,895 is still looking ambitious.