Singapore's Trans-cab Holdings pulled its S$114.2 million ($93 million) initial public offering on Monday after the company revealed an unexpected addition to its insurance premium.
Shanghai's EHi Car Service, on the other hand, is on the verge of pricing its New York Stock Exchange listing despite the lodging of a damaging FWP (Free Writing Prospectus) with the US Securities & Exchange Commission.
Trans-Cab returns to the taxi rank
In a statement, Trans-cab said it was, "Previously not aware there was an additional insurance premium of S$1.83 million inclusive of GST, which is to be invoiced by its insurer in the future," based on cumulative accident claims by its 7,400 fleet of drivers.
The DBS-led deal had been due to close its retail public offering on Tuesday and had attracted very high subscription levels for both its institutional and retail tranche. One fund manager who had placed an order told FinanceAsia, "It's very disappointing, but I think they've done the right and proper thing.
"Instead of trying to fudge the issue, it's much better for them to go away, complete their 2014 audit and come back next year," he said. "It was a very hot deal and everyone likes the company.
"We will definitely be putting an order in when they do return," he added. "It's just one of those things no-one could have foreseen."
The deal had already been priced at S$0.68 per share, representing a 2014 P/E multiple of 12.3 times 2014 earnings. One of the reasons investors liked it was because this valuation provides a very attractive discount to Singapore's largest cab company, ComfortDelgro.
The latter is currently trading at 19.6 times 2014 earnings and has performed strongly this year, up 29.3%.
Trans-cab had been offering 28% of its enlarged share capital through a 168 million share deal. There was also a 20 million greenshoe, which had already been placed out among institutions.
The deal had been oversubscribed from day one and attracted six cornerstone investors, which had been allocated 38.7% of the paper. These comprised: Eastspring Investments, FIL Investment Management, Havenport Asset Management, JF Asset Management, Lion Global Investors and Maxi-Harvest Group.
Institutions had been allocated 56.1% of the deal, with retail investors scheduled to receive the remaining 5.2%. All investors will now be refunded within the next three days.
EHi Car drives on
A 10 million ADS deal for Shanghai's EHi Car Service was scheduled to price after the New York close on Monday under the lead management of Goldman Sachs and JPMorgan.
The IPO had originally been scheduled to price last Thursday. At that point, it had been well-received, attracting a high proportion of long-only funds from China, which had placed orders with no price limits.
However, the deal was pushed back after the company lodged an FWP, which noted that, on November 12, PwC received a "communication from a non-employee claiming certain cars used in our fleet were not suitable for rental and were accounted for at a high residual value, above their actual residual value."
In a conference call with investors the following day, EHi Car's management strenuously denied the allegations and decried them as a malicious attempt to de-rail the IPO.
One investor told FinanceAsia he immediately pulled his order but others appear to have stayed firm. At Monday's close, the order book was said to be covered again, with pricing likely to come at the mid to high point of the $10 to $12 range.
EHi had already secured three Chinese investors through a concurrent private placement raising $50 million. These include Dongfeng Asset Management, China Universal Asset Management and Ctrip.
On its $10 to $12 price range, the deal has been valued on a 2015 EV/Ebitda multiple of 5.9 to 6.8 times. According to Frost & Sullivan, EHi Car is China's largest car services provider and second largest car rental provider by market share.
