The long awaited sale, which comprised a total of 19.45 million shares, was done at a price equal to yesterdayÆs close, or at W57,500 per share, after the stock had been offered to investors in a range that represented a premium of 0% to 0.35% to the latest market price. One source says the book was well covered but noted that even though many of the orders were submitted at strike price, it seemed there was almost an ôunderstandingö among investors that the final price wouldnÆt go above the latest close.
A likely reason for that is the 9.3% run-up in ShinhanÆs share price over the past seven sessions, including a 3.4% gain yesterday, which means it would have been a bit steep for the Korean state agency to try and squeeze an extra few won out of the investors.
Still, it wouldnÆt have been completely unthinkable as the 88.5% of the shares, or 17.2 million, actually went to a group of 17 strategic investors. That portion of the deal had been pre-negotiated by Citigroup and Samsung Securities, which also acted as joint bookrunners for the remaining 2.25 million shares that were sold through a bookbuilding exercise. The Reg. S deal was launched after the Korean market closed at about 4 pm Hong Kong time and the books were kept open for about six hours.
The strategic investors will pay the same price as that determined through the bookbuilding, one source said.
The total sale represented 5.1% of ShinhanÆs outstanding issued share capital and about 87% of KDICÆs 5.86% stake in the lender. There was no explanation last night why KDIC decided to keep about 2.9 million shares in Shinhan, which will give it a stake of no more than 0.7%. Based on the current share price, that stake will be worth about $180 million, which is likely too small to act as any form of overhang on ShinhanÆs share price. The remaining shares will be subject to a 90-day lockup.
There was no news last night of who the strategic investors were, but sources said they included several Korean names as well as JapanÆs Mizuho Financial Group. The latter had been expected to buy part of KDICÆs stake after Mizuho Corporate Bank bought 0.5% of Shinhan Financial for Ñ10 billion ($82.6 million) in September last year as part of a business tie-up.
Contrary to rumours, the strategic investors all bought into Shinhan as independent entities û not as part of a consortium.
There was also no information whether BNP Paribas chose to increase its stake in Shinhan as part of this sale. The French investment bank bought 90% of the shares when KDIC sold half its Shinhan stake in a sell-down arranged by UBS and Korea Investment & Securities Co. in April, 2006, and is the largest shareholder in the Korean lender with an 8.8% stake.
The two banks operate joint ventures within insurance and asset management in South Korea
The 2.25 million shares that were sold through bookbuilding were bought by about 20 investors. The book included a couple of Korean investors, but most of the demand was said to have come from international accounts, including both long only investors and hedge funds.
KDIC became a shareholder in Shinhan after it sold the now defunct Chohung Bank to Shinhan in 2003 and received bonds convertible into Shinhan shares to cover part of the payment.
Since the previous KDIC sell-down in April, which was also done at par to the W46,600 market price at the time, ShinhanÆs share price has risen 23%.
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