LMA prices Singapore's largest IPO of year

First med tech company comes to Singapore.

Medical devices company LMA (Laryngeal Mask Airways) priced its IPO just above the mid-point of the range on Friday (March 11) raising S$286 million ($175 million) post greenshoe via Credit Suisse First Boston and DBS.

The deal was marketed on a range of S$0.78 to S$0.95 and priced at S$0.88. Institutional books are said to have closed 14 times covered and retail books eight times covered, with an allocation split 90%/10% in favour of institutions.

The order book was fairly concentrated, with 80% of the deal going to roughly 40 investors, of which 40% were from Asia, 40% from the US and 20% from Europe. Most funds were either NJA specialists or global small cap accounts, although there were also said to be about half a dozen dedicated med tech funds. About 10% went to private banks and high net worth accounts.

Specialists report no price sensitivity in the order book, but say the company decided to leave some slack to make sure the deal trades well since it will not list until Friday. Bankers are also award that investors are getting nervous about the sustainability of the current rally.

"The Straits Times Index is hitting five-year highs, volatility indices are at all time lows and the market remains incredibly supportive of new issues," says one. "But there's a degree of nervousness creeping in. Accounts are beginning to wonder how long things can stay this rosy."

LMA's deal was priced at 12.5 times 2005 earnings. This represents a slight discount to the mid cap sector in Singapore, which trades 12.8 times and the overall market, which averages 15.2 times.

The deal also had a split of 89% secondary shares and 11% primary shares. Post greenshoe, the freefloat will stand at 56%.

LMA's IPO represents a landmark for Singapore, which has ambitions to become the main biosciences hub for Asia. In previous years the company would have been an obvious candidate for a Nasdaq listing since it derives 60% of its sales from the US. It is a global leader in LMA products, which are used during surgical procedures for anesthesia and airways support in place of simple face masks and endotracheal tubes.

Its success may act as a spur for a second biosciences company hoping to list in Singapore. Heart stent manufacturer Biosensor International is preparing an S$150 million IPO via Citigroup, UBS and UOB.

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