Nirvana Funeral Services priced its initial public offering of shares at the bottom of its indicative range on Wednesday after a volatile few days trading in Hong Kong.
The Malaysian death care firm raised $261 million after pricing 674 million shares at HK$3.00 per unit, at the trough of a range that scaled up to HK$3.38 per unit, after the benchmark Hang Seng Index shed about 2.5% early in the week, paring back some of its gains from the previous fortnight.
All of the shares were primary, and at HK$3.00 per unit the company was sold at a forward basis of 17.8 times its 2015 earnings.
Books closed late Tuesday night under the joint leads of CIMB, UBS and DBS and were multiple times covered, but the price was not formerly set until late Wednesday as the syndicate discussed final pricing with the company’s management.
“We want to ensure it has a good aftermarket performance so we [made sure] not to price it too aggressively,” one banker close to the deal told FinanceAsia.
Retail investors certainly dug Nirvana. The retail tranche was oversubscribed 51 times, enabling the syndicate to trigger the clawback and boost the amount allocated to this tranche from 10% up to 40%.
The institutional tranche was also covered multiple times, with a number of long-only institutional investors, hedge funds, Asean-focused funds and wealth management firms placing orders for the funeral services provider.
In terms of allocation, the majority of the institutional tranche went to global long-only firms and Asean-focused funds, the banker said. Geographically, more Asian funds participated, he added, without giving a percentage breakdown.
Beijing-based insurer Taikang Life Insurance and private equity firm Viewfinder came in as cornerstone investors, each pledging $30 million.
Nirvana offers integrated death care services in Malaysia, Singapore and Indonesia across 10 cemeteries, 12 facilities for storing cremated remains and two funeral homes. It is the largest death care services provider in Malaysia with a 31.1% market share in 2013.
It is also the only private operator of a commercial columbarium (where urns holding cremated remains are stored) in Singapore and one of the few private cemetery operators in Indonesia.
Outlook, HK Pipeline
Bankers FinanceAsia spoke to said they did not believe Tuesday's sharp drop in the Hang Seng was indicative of a major correction in the market but rather a brief bout of normal volatility.
Until this week, markets had been rebounding and had regained some of the losses incurred from the autumn, spurred on by an interest rate cut in China on November 21 and the start of of the Shanghai-Hong Kong Stock Connect programme.
A few issuers have taken advantage of the improved sentiment including Ping An Insurance, which raised $4.75 billion in a private share placement on December 1, and CGN Power, which raised HK$24.52 billion through an IPO days later.
Chinese social networking website Momo Technology this week also aims to follow in Alibaba and JD.com’s footsteps by selling up to 60 million American Depository Receipts at between $12.50 to $14.50 per share on Nasdaq and raise up to $230 million in the process.
Other deals in the works include BAIC Motor Corp, which is seeking up to $1.6 billion pre-shoe, and Xiabuxiabu Catering Management, the fast casual restaurant operator in China that’s looking to raise up to $146 million pre-shoe.
But the big deal looming on the horizon is Dalian Wanda Commercial Properties, which began taking orders this Monday for an IPO that could net it some $3.8 billion pre-shoe by year end. The deal has secured $2 billion worth of demand from 11 cornerstone investors, including Och-Ziff Capital Management, Kuwait Investment Authority (KIA), China Life Insurance, Ping An Insurance and Dutch pension fund APG.
