After the launch, the company's share price was hit badly, dropping 14% by the time it came to pricing. Only 1 million of the 8 million American Depository Shares (ADS) offered in the original deal were primary shares, the rest belonged to major shareholders cashing in their profits. Two of the sellers, OZ Funds and GSPS Asia (an indirect wholly owned subsidiary of Goldman Sachs), were not satisfied with the price that investors were willing to pay and decided to hold on to their stock. The deal size was subsequently reduced to 5.5 million ADS, 4.5 million of which were secondary shares.
Despite this, investors were still keen to get in on the deal, and to provide them with some reassurance, both OZ Funds and GSPS agreed to a 30-day lock in. The final price was $16, which was at 7.5% discount to the closing price of $17.29 on Thursday, August 14. The book was about two times covered, with most of the demand coming from the US. Investors were described as being predominantly long funds.
The share price picked up after the completion of the placement: rising 12% in trading on Friday, or 21% higher than the deal price. On the first day the greenshoe was exercised, which brought the deal up to $101 million.
Nasdaq-listed VisionChina runs an out-of-home advertising network that broadcasts local television on public transport vehicles in 16 Chinese cities. It acquires revenue by selling advertising slots in between the programmes, or embedded within the show. The company has recently reported strong growth figures. Total revenues were $33.9 million in the six months ending June 30 this year compared to $8.1 million received in the same period the year before.
The company received $15.3 million from the follow-on placement, which it will use for general corporate purposes that could include the purchase of complementary businesses.
The deal was organised by Credit Suisse, Merrill Lynch, and Morgan Stanley.