Inotera raises $418 million in block

The Taiwanese wafer manufacturer priced a GDR sale at the bottom end of the price range, with hedge funds making up the majority of the book.

Inotera Memories raised $418 million in an accelerated block trade on Friday after pricing some 40 million global depository receipts at the bottom end of the range.

The Taiwanese wafer manufacturer – a joint venture between Nanya Technology Corp and US semiconductor maker Micron Technology – sought to tap equity markets with a GDR sale at a time when its shares are trading at an all-time high.

The GDRs priced at $10.46 each, a 12.7% discount to the May 8 closing price of NT$36.10 ($1.20). Books opened at an indicative price range of $10.46 to $10.96 per share, with Credit Suisse and Morgan Stanley active bookrunners on the deal. UBS and Bank of America Merrill Lynch held passive roles.

More than 40 institutional investors participated in the deal, with the book primarily made up of Asian and European hedge funds, and to a lesser extent long-only institutional investors and offshore entities, a banker close to the deal said.

The GDRs are listed in Luxembourg, with one GDR equal to 10 shares. There is a 90-day lockup in place for existing major shareholders Micron and Nanya, which own 35% and 29% of the company, respectively.


Interest in the wafer manufacturer was likely buoyed by recent performance – shares are up 55% year-to-date, and they spiked 14% in the two weeks following release of the company’s earnings on April 22.

Inotera’s net income rose 1% to NT11.25 billion ($374 million) in the first quarter from NT11.1 billion in the fourth quarter, and compares with a NT613 million loss in the first quarter 2013.

The company reported the rise in net income despite experiencing a 2% quarter-over-quarter decline in sales, which it attributed to a 3% drop in average sales revenue per wafer. Wafer shipments were flat in the first quarter, Inotera said in its earnings statement.

The drop in sales aside, Inotera’s forecast for Dram (dynamic random-access memory) – a type of memory that stores data in a separate capacitor within integrated circuits – is bullish.

Inotera sells most of its products to Nanya Technology Corp and Micron Technology, its majority shareholders.

Inotera is anticipating a strong order book in the second half of the year on the back of a number of new mobile devices being launched, as well as the replacement of Windows XP systems, according to research firm Needham & Company.

“[Investors] like the sector. Dram, memory and anything [that is] part of tech hardware is appealing now,” the banker close to the deal told FinanceAsia, noting that the company waited until it reported earnings before going on the roadshow.

Proceeds from the GDR sale will be used to purchase machinery and equipment as Inotera revamps the process technology used in wafer production.

Inotera is currently trading at a forward p/e ratio of 6.14 times, in line with Nanya Technology, which is trading at a forward p/e of 6.63 times.

Its performance falls in line with Taiwan stocks overall. The Taiwan Stock Exchange Index (Taiex) is up 3% this year, with Chaun-Choung Technology, Sintronic Technology and Chiu Ting Machinery the top three performers, garnering returns of 6.98%, 6.9% and 6.86% year-to-date.

¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media