Temasek Holdings is trying to sell its entire 9.6% stake in Korea’s Hana Financial Group through a placement that could raise as much as W723.7 billion ($640 million) if priced at the top of the range. That top pricing seems unlikely, however, after the deal was kept open through the night, suggesting that there wasn’t enough demand to complete the transaction in the Asian evening.
A source said the deal was expected to price before the Korean market opens this morning, which would mean the order book would have been kept open for well over 12 hours. The initial talk was that the offering would close mid-morning US time, or before midnight Hong Kong time.
Like some of the other large Korean sell-downs this year, the deal was offered at a discount range starting from zero percent and while that seemingly worked earlier this year – two separate blocks in Woori Financial and Hynix Semiconductor were both priced at a zero discount – this time investors were seemingly tougher to convince.
One reason for the scepticism may be that Hana’s share price has just started to head lower following a six-week winning streak that saw the stock advance 22% to a high of W37,300 last Friday. Since then, it has dropped 4.7%, marking the third time in the past 12 months that the stock has reversed course after getting close to the W38,000 level.
Investors may also question why Temasek, a long-term shareholder in the stock, has decided to sell now. From Temasek’s point of view the move makes sense as the Singapore investment company is expected to continue to reduce the portion of financial sector assets in its portfolio to make room for more resources and commodity-related investments. As of the end of March this year, 37% of its $186 billion investment portfolio was in financial services companies, compared with only 6% in energy and resources.
But its decision to cash in its Hana shares may still not be seen as particularly positive by other Hana shareholders.
Temasek is offering 20.385 million shares at a price between W34,300 and W35,550, which translates into a discount between zero and 3.5%. Credit Suisse is the sole bookrunner of the transaction.
As of early this morning there was no indication about the type of investors submitting orders, or whether the deal would be fully covered in the end.
Temasek first invested in Hana Bank in March 2004 and added to its stake in December 2005 after the group was restructured and re-listed as Hana Financial Group. The second purchase saw it buy 13 million shares, which was equal to a 6.5% stake. Hana is the third largest commercial banking group in Korea after Kookmin Bank and Woori Bank.