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Euromoney, March 8 2019

A follow-on deal for a southeast Asian internet company this week illustrated just how much investor appetite there is for digital stocks in Asia – particularly if the name Tencent appears in the shareholder list. Few companies see an increase in their share price right through a primary follow-on, particularly when their value has doubled since the start of the year anyway.

Sea Limited is a Singapore-based internet company and the operator of southeast Asia’s biggest gaming platform. It is backed by Chinese internet and gaming company Tencent, which held about 40% of the company’s stock at the time of its 2017 IPO.

This week it raised $1.35 billion in a follow-on offering through Morgan Stanley and Goldman Sachs as joint bookrunners. They set out to sell 50 million shares and eventually upped to 60 million, 6.3 million of them to a Tencent affiliate and a firm linked to one of Sea’s directors.

The follow-on was striking because of the movement of the share price from its IPO and through the follow-on. It raised $884 million in its New York IPO in October 2017 for $15 apiece, and its share price initially declined, trading around the $10 as recently as the start of 2019.

The stock began to climb around the turn of the year, rising 43.1% from January 1 to February 26. It then announced its full-year results, and went up another 34.9% within a day. It announced its follow-on offer on March 1 at $22.50 per share, a 4.65% premium to the previous close, then rose another 7.91% on the day of the announcement, meaning the follow-on eventually priced at a discount. At the time of writing on March 8, the share price was up 133% in a little over two months – having continuously priced upwards all the way through a follow-on, a highly unusual state of affairs.

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Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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