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INDUSTOWER - Indus Towers News Story

₹254.6 -4.7  -1.8%

Last Trade - 07/05/21

Sector
Telecoms
Size
Large Cap
Market Cap £6.71bn
Enterprise Value £8.20bn
Revenue £1.37bn
Position in Universe 63rd / 3107

BREAKINGVIEWS-China Tower offering sends the right signals

Wed 25th July, 2018 3:23am
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.) By Alec Macfarlane HONG KONG, July 25 (Reuters Breakingviews) - China Tower’s initial public offering is sending the right signals. The mobile-mast giant has set a fair price range for its Hong Kong IPO, which could raise nearly $9 billion. It has also limited the amount of stock sold to so-called cornerstone investors, attracting more than just friends and family. That’s a refreshing change from the usual way Chinese state-owned entities are dumped in Hong Kong. The city is a go-to venue for Beijing’s giants to raise foreign capital, but many such deals in recent years have been cosy affairs. The last jumbo IPO of an SOE was in 2016 when Postal Savings Bank of China 1658.HK raised over $7 billion; nearly 80 percent was pre-ordered by a hodgepodge of other state-backed firms including a port operator and a shipbuilder. This tactic has been key to getting deals done at expensive valuations unappealing for global investors. That’s why the latest offering stands out from the crowd. Cornerstones have only been allotted 16 percent of the offer. This should help liquidity when the company debuts in August as anchor investors are typically locked up for six months, meaning limited shares are available for trading if they buy most of the stock. Meanwhile, the price range values China Tower at 6.5 to 7.3 times estimated 2019 EBITDA, according to Thomson Reuters publication IFR. That looks inexpensive compared to India’s Bharti Infratel and Indonesia’s Tower Bersama, which trade at 7.6 and 10 times, respectively. Reasonable pricing will have helped the cornerstone roster to attract respected institutional firms including Chinese investment firm Hillhouse Capital and U.S. hedge fund Och-Ziff. The next key test will be how it fares in secondary trading. Five Hong Kong IPOs in 2016 worth more than $1 billion that sold most of their stock on offer to SOE-heavy cornerstone books have since fallen an average of 11 percent from their issue price, with most underperforming the Hang Seng Index. A strong performance by China Tower could convince others of the merits of this friendlier approach. On Twitter https://twitter.com/AlecMac11 CONTEXT NEWS - China Tower, the world’s biggest operator of telecommunications towers, has launched an initial public offering in Hong Kong that could raise up to HK$68.1 billion ($8.7 billion), the company said at a press conference on July 24. - The offering will consist of 43.1 billion shares at an indicative price range of HK$1.26 to HK$1.58 each, it added. - Stock worth roughly $1.4 billion, or 16 percent of the total offer at the top end of the price range, has been pre-sold to 10 cornerstone investors, according to the prospectus. - Chinese investment firm Hillhouse Capital has committed to buy $400 million of shares. U.S. hedge fund Och-Ziff Capital Management will invest $300 million. Taobao, Chinese internet giant Alibaba’s online shopping subsidiary, will invest $100 million. - Cornerstone investors in Hong Kong subscribe for stock ahead of an IPO and are typically prevented from selling for six months. China Tower’s shares are due to begin trading on Aug. 8. - China International Capital Corp and Goldman Sachs are acting as joint sponsors of the IPO. A total of 15 banks are working on the stock-market listing. - For previous columns by the author, Reuters customers can click on MAC/ - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: http://bit.ly/BVsubscribe <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Cornerstones take 16 pct of China Tower’s $8.7 bln HK IPO – sources urn:newsml:reuters.com:*:nL4N1UJ1IQ BREAKINGVIEWS-Old-school Chinese tech IPO bedeviled by startups urn:newsml:reuters.com:*:nL4N1UF164 BREAKINGVIEWS-Tangled loyalties complicate China Tower IPO urn:newsml:reuters.com:*:nL3N1SM151 BREAKINGVIEWS-Signals are good for China Tower IPO urn:newsml:reuters.com:*:nL4N1KT1D5 Prospectus http://www.hkexnews.hk/listedco/listconews/sehk/2018/0725/LTN20180725011.pdf ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Una Galani and Katrina Hamlin) ((alec.macfarlane@thomsonreuters.com; Reuters Messaging: alec.macfarlane.thomsonreuters.com@reuters.net))
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