APTT lodged its preliminary prospectus and is currently doing book building for its IPO.
My broker from DBS sent me the book building term sheet and here are the key terms.
Offering size - 1,393,696,000 units.
Cornerstone - 451,068,000 units. (about 31.4% of offering size)
Placement tranche - 917,628,000 units
Public offering - not less than 25m units.
Book building price range - $0.92 to $1.00 per unit
Distribution yield - FY2013 8.93% to 9.71%
- FY2014 8.25% to 8.97%
- Asian Century Quest
- Capital Research and Management
- Eastspring Investments (part of Prudential)
- Indus Capital
- Lion Global Investors
- Neuberger Berman
- Och Ziff
- Signature Global Advisors
- Quantum Partners (Soros)
The book building will close on May 15 and after the price is set, the public offer will start on 17 May and ends on 27 May. The pricing will give you a hint as to whether the demand for the stock is "strong". I am not sure if there are other special incentives given to the cornerstone investors but we shall see. In any case, i am not 'impressed' with this list of cornerstone. It has the smell of too many "hedge funds" and they are certainly not value investors.
Mr IPO's biased view
I have to tell you upfront that i am biased against the pay TV business in Taiwan. There is only one word to describe it - messy and cut throat. There are many players who want to get in the market only to realize how competitive and cut throat the business is and by being the No.3 player in Taiwan, i frankly don't see what so great about this business. If MIIF has been able to sell it, they would have sold it long time ago rather than "repackaging it" and selling to yield hungry investors now.
Let's look at the financials. Without reading the prospectus in detail, I am not sure how much the IPO proceeds will be used to "wipe out" the long term debt of the company which will then lower the interest and finance costs. I also don't understand why in taiwan, they have to pay such huge tax expenses which is even higher than the profit before tax. Again, i have not read the prospectus in details so i am just shooting off my cuff.
The pro-forma statements "looked somewhat different" as it has assumed the issuance of units to have taken place and in using the latest "In-thing" Chinese phrase “停电魔术” the financials suddenly looked profitable and attractive.
Whatever it is, the majority of the proceeds will be used to pay off the original shareholder and not much will be used to pay down the debt. In the addition, i think the large number of units in issue will probably "cap" the upside.
Let's see if my biased views will change in the coming weeks. I will not give you my ratings and fair value for now. Please check back this blog again when the IPO is officially launched. ^_^