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| Sun Art Retail Group | |
| Value | HK$9.47 billion IPO |
| Global coordinators | Citi, HSBC, UBS |
| return to the Asian Deals of the Year index | |
Good deals were harder to find in the equity world, but they were out there, and a natural standout was Sun Art Retail Group, whose $1.2 billion IPO achieved the rare double act of being good for both issuer and investors. Most deals declined, even tanked; Sun Art priced at HK$7.20 in July and at the time of writing was trading at just under HK$10.
However, this wasn’t a case of leaving money on the table: the deal was priced at the top of its range – 32 times forecast 2011 earnings. So what went right?
“At the time we did the IPO, the market was quite unstable,” recalls Jean-Patrick Paufichet, CFO of Sun Art. “In the beginning of June, we tested some investors and made a decision to allocate a big part of the deal to cornerstones, because we realized they were very interested in the company in the long term.”
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Jean-Patrick Paufichet, Sun Art |
Eventually, 40% of the deal would go to cornerstones, attracted by the growth prospects of the hypermarket chain in China and the sites it had secured for development. “The cornerstones showed the way to the investment community; after that it was easier to get interest,” Paufichet says. “Then we priced at the right level. Compared with our peers, we were a little bit over, but not too much. We were the only pure hypermarket player listing in Hong Kong, and pure Chinese, so there was a lot of interest in us.”
Sun Art was the only consumer retail deal of scale all year from this part of the world. Being nicknamed ‘the Wal-Mart of China’ didn’t hurt either.
It wasn’t plain sailing, though. The whole IPO had to be delayed after an error arose in the prospectus, requiring a supplementary prospectus to be issued and for all investors to reconfirm their orders. Most did. Their experience was one of the few positive ones in the Asian stock markets in 2011.
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Asia |
| Sun Art Retail Group |
| Kingdom of Thailand |
| ICBC (Asia) |
| BP/Reliance |
| Vedanta Resources |
| Republic of Indonesia |
| Return to the Deals of the Year main index |
