It was a busy night for placements in Asia last night with two Korean blocks in the market and Philippine infrastructure investment company Metro Pacific Investments raising Ps8.64 billion ($201 million) from a top-up placement that was upsize due to solid demand.
The largest of the two Korean blocks was Kookmin Bank’s sell-down of treasury shares in its parent company KB Financial Group, which was first flagged in April, when the company started to look for banks to help arrange the deal. There have been several attempts to put a deal together since then with different banks on the ticket. Last night’s deal was jointly arranged by Bank of America Merrill Lynch and Citi.
The deal comprised all of Kookmin’s 34. 97 billion KB Financial shares and at the indicated price range, the deal amounted to about W1.8 trillion ($1.7 billion).
A little bit later Korea Deposit Insurance Corp (KDIC) launched a block in Shinhan Financial, seeking to raise about W150 billion ($141 million). That trade was arranged by J.P. Morgan and Woori Securities.
As of early this morning FinanceAsia had been unable to obtain the pricing details for either of these two blocks.
The Metro Pacific trade went well, however, and the bookrunners were able to exercise the entire upsize option, increasing the deal size by 33%. However, half the deal was bought by Metro Pacific’s parent company, Hong Kong-listed investment firm First Pacific, as it wanted to limit its dilution.
The company initially offered 1.8 billion shares at a price between Ps3.57 and Ps3.70, which translated into a discount of 2.4% to 5.8% versus yesterday’s closing price of Ps3.79. Even with the size increase to 2.4 billion shares, demand was strong enough to fix the price slightly above the bottom of the range at Ps3.60 for a discount of 5%.
The final deal size accounted for about 9.8% of the enlarged share capital, and just over 100 days worth of trading volume. The latter is a common scenario in the thinly traded Philippine market, however, and investors don’t tend to worry too much about it. The entire market only turns over about $80 million per day, so placements are a good way for funds to acquire meaningful positions.
Metro Pacific’s share price has had a bit of rebound since mid-June, but seems to be lacking the momentum to push through Ps4.00 — the same level where it reversed course in April — and for the past couple of sessions it had been losing ground again.
However, investors generally like Metro Pacific, which is the only pure-play infrastructure company in the Philippines with interests ranging from water and electricity to toll roads and hospitals.
According to a source, the deal attracted close to 30 investors, including both existing shareholders (other than First Pacific) and new investors. The allocation was heavily weighted towards a small number of accounts however.
Metro Pacific said it will use the money to make more acquisitions, but didn’t mention any specific target.
The deal was jointly led by CLSA and J.P. Morgan.
Kookmin offered its KB Financial shares, which correspond to a 9.05% stake in the company, at a price between W51,600 and W52,000 apiece. The range translates into a discount between 2.8% and 3.6% versus yesterday’s closing price of W53,500.
KB Financial’s share price has come down since the sell-down was first flagged in April, but has staged a bit of rebound since mid-June. It is still down 13.8% from its 2011 high of W62,100 that it reached in early January, however. Kookmin ended up with the KB Financial shares when the group was restructured in 2008 and according to Korean regulations it is required to sell them by September this year.
Meanwhile, KDIC, which holds stakes in various Korean banks on behalf of the government, offered approximately 2.9 million shares in Shinhan Financial at a price between W50,960 and W52,000. The bottom end of the range translates into a discount of 2% while the top end is equal to yesterday’s closing price.