Youngone Corp, a Seoul-headquartered original equipment manufacturer (OEM) of garments, has raised $113.8 million from its debut offering of global depository receipts (GDRs), after fixing the price at a 2.7% discount to Wednesday’s close of its common shares.
The fully marketed deal priced late Wednesday evening after a roadshow took the management to Hong Kong, Singapore and London on Monday through Wednesday this week. There was no indicative price range for the transaction as the deal was carried out against a live market.
This is the first GDR follow-on by a Korean company since OCI, a specialist chemicals producer, raised $700 million in May 2011, according to Dealogic. OCI also priced its GDR offer at a 2.7% discount to the latest close.
The Youngone transaction is also the first straight equity deal of size in Korea this year. Before this, the biggest offering was a $50 million follow-on by Hansol Technics, the data show.
Youngone sold 3.5 million GDRs at $32.50 each, resulting in a total deal size of $113.8 million. The deal size was initially expected to be roughly $120 million to $130 million.
The offer price was equivalent to W35,188 per common share, which represents a 2.7% discount to Wednesday’s close of W36,150, a source said yesterday. Each GDR is equal to one common share.
As per Korean regulations, the final price couldn’t come at a wider than 10% discount versus the volume-weighted average price (VWAP) for a three-day period ending two days before the pricing (the reference price).
As the deal priced late Wednesday evening, the reference price was equal to the VWAP on January 23-25, which worked out at W38,504, the source said. The offer price represents an 8.6% discount to that reference price.
Youngone’s common shares gained 4.8% yesterday to close at W37,900. This was comfortably above the placement price and brought its year-to-date gains to nearly 15%. The Kospi Index, which was down 0.1% yesterday, has slipped 1.8% since the start of the year.
The deal was well covered, with good participation from international long-only investors and existing shareholders, as well as some hedge funds, the source said. The buyers were mainly Asia-based, and the top few accounts accounted for a majority of the allocations, the person noted.
The offering size was equal to about 8.6% of the existing share capital. The GDRs will be listed in Singapore.
Youngone, which makes outdoor sportswear, shoes and backpacks for the likes of Nike and North Face, plans to use the proceeds mainly for capital expenditures, for the expansion of manufacturing facilities at different overseas sites and for general corporate purposes, according to the source.
Youngone has manufacturing bases around the world, including in Bangladesh, China, Vietnam and El Salvador.
Credit Suisse was the sole bookrunner for the GDR offering.
The ECM volume in Korea stood at $8.4 billion last year, a decline from $17.5 billion in 2011, according to Dealogic. So far this year, there have been 14 Korean ECM transactions, totalling $672 million, including Lotte Shopping’s $303 million exchangeable bond.