貿易通獲2005亞洲金融成就獎

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Best Small-Cap Equity Deal
Tradelink Electronic Commerce HK$335 million IPO

Lead manager: DBS Asia Capital
Legal counsel: Simmons and Simmons, Deacons

We define small-cap equity deals as offerings below $100 million and this deal fits nicely into that space. In fact, this is probably the smallest Hong Kong government privatization we have ever given an award too.

Tradelink is an internet portal for facilitating customs forms filed with the Hong Kong government. It is a very stable business, but in order to foster competition in the sector, the government decided to sell down its major stake (other key shareholders include Swire and PCCW).

What makes the deal more interesting was its strategic importance for the government. As is well known, the Hong Kong government had made selling the Link Reit a priority and this deal was an effective way to test the water in the markets. Just like the Reit, the HK$335 million IPO was marketed by DBS as a yield play - with a 7% dividend yield - and hence was able to gauge demand for yield products, particularly among retail investors at a time of rising bank rates.

After the success of this deal, which saw 34.5% of the company sold and was 144 times oversubscribed on the retail tranche - the government could fairly conclude that yield products were still enormously enticing and go forward with Link with a good deal more confidence.

The deal was launched into a falling market in October. But clearly, the yield story proved effective, since the deal priced at the top end of the range at HK$1.25 and subsequently traded up 7.2% on the first day of trading. Year to date it is up 15.2%, which suggests an ideally priced deal.

This is all the more remarkable when you consider that it priced at a time when seven other deals were pulled or postponed, and most other deals launched at a similar time all traded down on the first day (such as Kasen International, Sincere Watch and Guangdong Nan Yue). And all that in spite of going 'head-to-head' with China Construction Bank, and the massive amounts of liquidity it was sucking up (the deals priced on the same day).

All in all, this constitutes a small, but beautifully formed deal.

(Extracted from FinanceAsia.com - the network for financial decision makers)