Deals of the year - Top quality issuers succeed in demanding markets
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| Kola Luu: Kepco's success crucial for Korea |
The Asian crisis left Korea's government with an urgent need to promote corporate restructuring. One of its tactics has been to sell equity stakes in major state-owned companies. Privatization started in 1997 when a $100 million equity offering for SK Telecom was launched and continued the following year with Pohang Iron & Steel (Posco) tapping the equity market three times for a total $495 million.
Privatization accelerated in 1999, with four big offerings, one for each quarter: Korea Electric Power (Kepco), Posco, Korea Telecom and Korea Tobacco.
Kepco went first. Its American depositary receipts (ADRs) offering was launched on March 25. It couldn't have gone better. The book was more than two times oversubscribed, despite having to overcome tremendous volatility and profit-taking on the Dow Jones Industrial Average during the week before launch.
Before the close of the deal, 42 million ADRs - amounting to 3.3% of the company - were planned to be sold. But strong demand from investors worldwide prompted Kepco and global coordinators Salomon Smith Barney, ING Barings and Hyundai Securities to increase the offering by 30% to $753.6