Temasek raised W895 billion ($793 million) from another partial sale in South Korean biopharmaceutical firm Celltrion on Monday, moving quickly to sell the shares shortly after the lockup period for its previous sale expired last month.
Through an accelerated bookbuild offering, Singapore’s sovereign wealth fund sold 3.63 million shares in the Korea-listed firm at W247,000 per share -- at the widest end of the marketed 5% to 8% discount range against the stock’s W268,500 Monday close.
Sources familiar with the situation said the transaction, which was made through Temasek’s subsidiary Ion Investments, was upsized from 3.39 million shares after being oversubscribed "multiple" times by institutional investors. The final deal size equated to 2.9% of Celltrion’s existing share capital.
The Reg S deal was Temasek’s second selldown of Celltrion shares in seven months after its $701 million block sale in March, in which it sold 1.8% of the company as part of a larger $1 billion deal that also involved the sale of shares in Celltrion Healthcare, the biosimilar subsidiary of Celltrion.
These two transactions sent a signal to the market that Temasek wanted to exit its investment in Celltrion and created an overhang for its remaining 9.6% stake in the Korean manufacturer of biologic drugs, even though it has never formally disclosed its intentions.
Equity investors and analysts FinanceAsia spoke to are banking on further stake sales because of the rush with which Temasek appears to have come to market again after the six-month lockup from the March deal expired in September.
The sovereign wealth fund also appears to have disregarded the recent sharp plunge in Celltrion’s share price, which 31.5% down from its record high in March, outpacing the benchmark Kospi Index’s 12.5% decline over the same period.
As a result, Temasek raised only slightly more than last time, despite putting a much larger stake up for sale.
Even so, as one source familiar with Temasek noted, both the Celltrion sales were launched on the back of major breakthroughs for the company.
The March sale came a few weeks after Celltrion's shares were listed on the Kospi, Korea’s main board, having previously traded on the second-tier Kosdaq board.
This time around, the source added, Temasek sold shares less than two weeks after Rituxan, a biosimilar drug jointly developed by Celltrion with Israel's Teva Pharmaceutical Industries, was cleared for approval by an advisory committee at the US Food and Drug Administration (FDA). FDA approval will allow Celltrion to commercialise the drug in the US.
In any case, the Singaporean sovereign wealth fund has achieved a whopping return of 12.5 times from its Celltrion investment, having picked up a 14.2% stake in Celltrion for $310 million in two separate deals in 2010 and 2013. The stake is now worth about $3.9 billion based on Monday’s selling price.
Temasek is subject to a 90-day lockup for its remaining Celltrion shares.
Citigroup and Credit Suisse were joint bookrunners of the block trade.