EXIT HURDLES
Several other private equity
buyouts have run into similar
objections from Taiwanese
regulators more recently, most
notably a string of buyouts in
the cable television industry.
In January, Carlyle Group
finally sold a 62.4% stake in
cable TV operator Eastern
Broadcasting to Taiwanese
investment firm Mao Te
International, which is owned
by local property tycoon Chang
Kao-shiang, for NT$11.4bn after
several attempts.
CTBC Bank is leading a
NT$7bn five-year loan for Mao
Te. (See Taiwan Syndicated loans.)
“It took a long time for
Carlyle to get an exit as Taiwan’s
regulators take a cautious
approach to approving foreign
investment in or exiting certain
sensitive industries such as
public utilities and the media
sector ... which can also lead to
delays in the approval process,” a
third loan banker in Taipei said.
Carlyle acquired the
controlling stake in EBC in
2006 from the ex-chairman of
Eastern Media International for
an undisclosed sum. Carlyle and
Eastern Media International
(21.32%) tried repeatedly to
offload their stakes since mid
2015.
Before the successful sale to
Mao Te, the pair’s last attempt
was in June 2017, but Taiwan’s
National Communications
Commission blocked
telecommunication services
provider Taiwan Optical
Platform Group’s proposed
purchase of a 65% stake in EBC.
Four lenders, including sole
lead CTBC Bank, were expected
to complete a NT$13.5bn
club loan for Taiwan Optical’s
buyout.
In 2016, Dan Mintz, a
producer of Hollywood films
including Iron Man 3, backed
out, seven months after
announcing an agreement
with Carlyle and Eastern Media
International to buy their
combined 82.2% stake in EBC in
December 2015.
In February 2017, South
Korean private equity firm MBK
Partners also suffered a blow to
its plan to sell its stake in cable
TV company China Network
Systems.
Taiwan’s Far EasTone
Telecommunications and
Morgan Stanley Private Equity
Asia withdrew a joint bid
for CNS, which disappointed
lenders who had committed to
a NT$46.8bn loan backing the
buyout.
That deal also suffered a
drawn-out regulatory process
that lasted nearly 20 months. LTA extends
corporate curve
Bonds Longest new issue in eight years furthers
Singapore’s infra funding ambitionsBY KIT YIN BOEYSingapore’s LAND TRANSPORT
AUTHORITY added to the city-
state’s profile as a regional hub
for long-term infrastructure
finance with a S$1.5bn
(US$1.1bn) 40-year bond, the
longest in the currency since
2010.
The notes priced last Monday
at par to yield 3.45%, in line
with initial price guidance of
3.45% area.
No corporate issuer has issued
bonds at such a long tenor
since Temasek Holdings sold
Singapore’s first 40-year note in
2010, raising S$1bn.
Unlike Temasek’s tightly held
bonds, the new notes from LTA,
whose paper tends to be more
liquid, are more likely to set
a new local benchmark. The
Singapore government does not
issue bonds with tenors longer
than 30 years and the Singapore
dollar SOR curve stops at 30
years as well.
The deal was LTA’s second
new offering this year, after the
statutory board sold S$1.2bn of
10 and 30-year bonds at 2.75%
and 3.35% in March. This was
followed by a S$300m tap of the
30-year bonds in late March.
Despite the large issuance
in March, LTA drew robust
demand for its new offering.
Distribution data were not
disclosed but orders were more
than sufficient to increase the
size from a S$1bn minimum
target. Insurance companies
and fund managers were major
purchasers of the notes.
Lacking comparable
references, joint lead managers
and bookrunners DBS, OCBC,
Standard Chartered Bank and UOB
had to price the new notes using
LTA’s 2048s as a guide.
“The 2048s priced at a spread
of 37bp over SOR and the new
2058s are at a spread of 54bp
over an extrapolated 40-yearSOR,” said one banker involved
in the deal. “That does give a
decent premium for investors.
In addition, the absolute yield of
3.45% is optically a nice pick-up
over the 3.35% paid on the 30-
year notes.”
The establishment of a 40-year
benchmark furthers Singapore’s
goal to become an infrastructure
funding hub for the region. As
part of the push, the government
has encouraged statutory boards
to raise funds in the local market
for large-scale projects.
Minister for Finance Heng
Swee Keat in February floated
the idea of extending guarantees
to boost fundraising in the local
bond market for such projects.
Infrastructure spending in the
city-state is expected to rise to
S$20bn in fiscal 2018, a sharp
jump from S$8.5bn in 2011.
The bulk of the expenditure is
in housing and transportation,
including a new terminal at
Changi airport.
Still, bankers are not
expecting an immediate flood
of long-dated debt offerings as
there are only a few issuers who
require such tenors to match
long-term assets.
“I’m also unsure if there
will be sufficient liquidity in
the investor market to soak
up a large amount of long-
dated notes which essentially
are taken up by some fund
managers and insurance
companies,” said one DCM
originations banker.
“For instance, if another
issuer emerges with a 40-year
tenor so soon after LTA, forget
a S$1bn-plus issue size; we can
probably only do a S$500m or
S$750m at most.”
The new unrated bonds settle
on July 30 and will be drawn
from a S$12bn multi-currency
MTN programme. The proceeds
will be used to fund LTA’s
land transport infrastructure
development projects. For daily news stories
visit http://www.ifrasia.comyear and more are expected.
Electric vehicle manufacturer
Nio is planning to raise
about US$1.5bn after the
summer, while Tencent Music
Entertainment is looking to
raise US$3bn–$4bn in October.
“Chinese issuers are still
interested in US listings,
especially if their comparables
are listed there. US investors
are also very sophisticated in
valuing fast-growing Chinese
companies,” said an ECM
banker focused on US-Chinese
listings.
However, US investors are
also selective. Some smaller
Chinese IPOs did not trade
well earlier this year, and the
enthusiasm around Pinduoduo
did not help other candidates.
Last week, AURORA MOBILE and
CANGO raised less than targeted
from their US IPOs after selling
fewer shares.
Aurora Mobile, a mobile
data aggregator, raised
US$77m from a Nasdaq IPO,
39% less than the US$125m
target at the top end of the
US$8.50–$10.50 range. Cango,
a provider of automotive
transaction services in China,
raised US$44m from a NYSE
IPO after cutting the deal size
by as much as 71%.
Both companies traded well
on their debut last Thursday,
with Aurora shares up 3.5% to
US$8.80 and Cango up 13.8% to
US$12.52.
CICC, Credit Suisse, China
Renaissance and Goldman Sachs
were the bookrunners on
Pinduoduo.