CLASS ACTIONS
Third-party funding gives an
alternative source of support
to parties that lack the means
to litigate a dispute, potentially
opening the door to US-style
class action lawsuits that follow
the ‘no win, no fee’ model.
While some high-net-
worth investors are optimistic
that such a step would help
them get their money back
from delinquent issuers,
lawyers point out that current
regulations only apply to parties
contemplating international
arbitration proceedings.
“Outside the international
arbitration context, for
now, third-party funding is
still generally prohibited in
Singapore,” said Robson Lee,
partner at Gibson, Dunn &
Crutcher.
“It would thus be difficult
based on current laws for retail
bond investors to obtain third-
party litigation funding in
connection with liquidation or
debt restructuring proceedings
in Singapore. It is, however,
envisaged that the Singapore
government may extend
third-party funding to other
categories of legal proceedings
in the future.”
Even then, industry observers
said it would be difficult to
open this funding route to
retail bondholders given the
sheer numbers involved.
“It will even be too
premature to talk about
recoveries as there are a few
hurdles to cross, including that
of conducting investigations,”
said one observer.
The only example of
litigation funding so far in
Singapore came in 2015 when
the High Court allowed the
liquidator of Vanguard Energy
to sell “a cause of action”, as
well as any proceeds from that
action, to three shareholders
under the liquidator’s statutory
powers of sale.
That position should augur
well for the application lodged
by Trikomsel’s liquidators,
according to industry observers.
BlackOak, legal adviser
to KordaMentha, and IMF
Bentham declined comment. Fosun Group unit
eyes India IPO
Equities Gland Pharma hires three banks for up to
US$500m IPOBY S ANURADHAGLAND PHARMA has moved one
step closer to offering Indian
investors the novelty of the first
local listing from a Chinese-
owned company.
Last week, the injectable
drugs maker majority-owned
by Fosun Group hired Citigroup,
Haitong Securities and Kotak
to manage an IPO of up to
US$500m. The launch is
planned for the first half of next
year, people with knowledge of
the transaction said.
The primary and secondary
share mix of the IPO is not
known, but company founders
PVN Raju and Ravi Penmetsa are
likely to sell shares.
Fosun, which has been
making high profile acquisitions
in the past few years, bought
a 74% stake in the company
last year for US$1.1bn through
Shanghai Fosun Pharmaceutical.
It bought the stake from KKR
Floorline Investment and the
founders of Gland Pharma.
Fosun did not respond to an
email seeking comment on the
offering.
Market participants are
positive about the IPO given the
high growth and margins of
the injectables business. Gland
Pharma, which was founded in
1978, sources most of its revenue
from Europe and the US.
“The Gland IPO may get a
good response from investors,
subject to reasonable pricing, as
the company has an injectables
business and its facilities have
been approved by the US Food
and Drug Administration with
no regulatory issues,” said
Shrikant Akolkar, senior analyst
at broking house IIFL Securities.
Akolkar pointed to profit
margins in the injectables
business, which are around 30%
compared with an 18%–20%
range in the oral drugs sector.
Investors have done wellby snapping up shares in the
IPOs of Indian pharmaceutical
companies in the past few
years. Alkem Laboratories, Eris
Lifesciences, Laurus Labs and
Syngene International are all
trading above their respective
IPO prices.
The planned deal comes at
a time when activity in the
Indian IPO market has slowed
compared with last year,
although the country is still
one of the most active issuance
markets in Asia. Thomson
Reuters data indicates that as
of September 5, equity deals
totalling US$15.5bn were done
in India, as against US$28bn for
the whole of 2017.
Although the IPO is planned
for early next year, bankers away
from the deal said the company
will wait for election-related
uncertainty to subside before the
launch. India is set for federal
elections in May next year and
issuance activity is likely to slow
in the run-up to the vote.
Furthermore, some analysts
say the deal could be vulnerable
to political tensions. Border
disputes between India and
China have flared up in the
past, including a military stand-
off last year over the remote
Doklam plateau, though some
noted Fosun purchased its stake
in Gland Pharma when tensions
were high.
“If Fosun can buy an Indian
company at the height of the
Doklam crisis, then surely Gland
Pharma can sell an IPO,” a
banker away from the deal said.
Chinese investment banks
have stepped up their activities
in India in recent years, with
Haitong Securities and CLSA
being the most active. Haitong
managed the IPOs of HDFC
Standard Life and Central
Depository Services last year,
and also mandated on the up
to Rs15bn (US$212m) IPO of
Reliance General Insurance. For daily news stories
visit http://www.ifrasia.comstrong name recognition helped
interest investors.
DOLLAR CLASH
A small complication came in
the middle of marketing when
HSBC on Wednesday launched
a US$3.25bn offering, including
a 8NC7 tranche that priced at a
yield of 4.292%.
“A few investors raised
questions after the dollar
transaction hit the screens
because the initial price
thoughts were 20bp wider than
what we were showing to yen
investors, but it had 20bp of
price tension,” said another
source. “When investors got
to the office the next morning
they saw pricing was in line
with the yen trade.”
After an IPT of 165bp
area was announced, the
8NC7 dollar tranche priced
at Treasuries plus 145bp,
which Japanese bankers said
translated to around 55bp over
yen offer-side swaps, in line
with the pricing of the Samurai
tranche.
HSBC, Daiwa, Mizuho and
SMBC Nikko were bookrunners
for the Samurai deal, which
was run under the pot system.
The senior bonds are
expected to be rated A2/A
(Moody’s/S&P).
In August, HSBC reported
profit before tax of US$10.7bn
for the first half, up 4.6% on
the same period in 2017, but
adjusted profit before tax of
US$12.1bn was 1.8% lower than
the same period a year ago. The
bank said revenue growth and
lower expected credit losses
were offset by higher operating
expenses.
In June, group chief
executive John Flint said the
bank was re-entering “growth
mode” after a period of
restructuring, and would target
a return on tangible equity
of greater than 11% by 2020.
Part of the bank’s strategy is to
accelerate growth in its Asian
business, according to its 2017
annual report.