“GM can take advantage of
the strong bid for short-term
paper, perhaps to fund local
operations, while the flat and
elevated cross-currency basis
swap curve means you can
raise funds in Aussie dollars
and swap them back into US
dollars at significantly better
levels than were available a few
months ago,” said a Sydney-
based syndication banker.
GM still sells vehicles in
Australia, although it closed its
Australian plant, which made
Holden cars, in October 2017.
The Australian dollar/US
dollar one-year cross-currency
basis swap has soared from
12.38bp on June 5 to 30.25bp
last Tuesday with smaller
increases seen along the curve.
The three-year has climbed
from 16.88bp to 31.15bp in
that time while the five-year
and 10-year basis swap levels
have moved from 20.76bp and
31.88bp up to 35.25bp and
37.50bp, respectively.
Europe has taken up some of
the corporate Kangaroo slack,
with UK-listed Vodafone Group
and German rail operator
Deutsche Bahn among the
biggest issuers.
Despite the upturn in
European interest, new visitors
will still benefit from scarcity
demand given the slowdown
in overall corporate supply this
year. Domestic year-to-date
sales of A$6.2bn are a little over
over half the A$11.3bn raised
in the same period in 2017,
according to Thomson Reuters
data.
Given its size, GM will
certainly be looking to do a
sizeable deal with expectations
centring on a A$1bn-plus
inaugural print. A roadshow is
no guarantee of a subsequent
issue, of course, with US
motorcycle maker Harley-
Davidson still yet to print its
first Kangaroo, 19 months after
holding investor meetings in
Australia and Singapore. Meituan Dianping
builds early momentum
Equities IPO books multiple times covered despite
volatile marketsBY FIONA LAUMEITUAN DIANPING’s Hong Kong
IPO of up to HK$34.6bn
(US$4.4bn) was multiple times
covered as of last Friday despite
a 3.3% drop in the Hong Kong
stock market during the week.
The books were covered on
the first day of bookbuilding
last Tuesday and momentum
continued to build as the
week went on. At the time of
writing, about 150 investors
were participating, according to
people close to the deal.
“Some top-quality global
long-only funds came into the
deal on day one, which is a
very encouraging sign. Despite
the market sell-offs later in
the week, we didn’t see many
investors pull their orders,” said
one of the people.
Beijing-based Meituan, a
diversified online services
provider, is selling about 480m
shares at an indicative price
range of HK$60–$72 each.
The float could raise up to
US$5.06bn if a 15% greenshoe is
fully exercised.
The IPO values the company
at around US$45.9bn–$55.1bn
pre-greenshoe, taking into
account shares to be issued
under a pre-IPO employee stock
ownership plan. The post-shoe
market capitalisation on the
same basis is US$46.4bn–
$55.7bn.
The price range also
represents a 2020 P/E of 23.5–
28.2.
“Investors like Meituan’s
market-leader position and
believe it can monetise its huge
client base. The participation
of international funds as
cornerstone investors also helps
drive institutional demand,”
said another person close to
the deal.
Meituan has lined up
US$1.5bn of cornerstone
investments from fiveinvestors, including its existing
backer Tencent Holdings.
The Chinese internet giant
has committed US$400m,
Oppenheimer Funds US$500m,
UK hedge fund Lansdowne
Partners US$300m, New York-
based Darsana Capital US$200m
and China Structural Reform
Fund US$100m.
Meituan, which runs a range
of online businesses from food
delivery to ticketing services,
posted a huge loss of Rmb19bn
(US$2.8bn) in 2017 on surging
marketing and research
expenses and after accounting
for its preferred shares.
According to an IPO
prospectus published last
week, in the four months
ended April, Meituan’s
revenues jumped 95% to
Rmb15.8bn (US$2.3bn)
while its loss amounted to
Rmb22.8bn, compared to an
Rmb8.2bn loss over the same
period in 2017. The latest
numbers reflect the impact of
acquiring unprofitable bike-
sharing startup Mobike.
Meituan intends to stay
focused on developing its food
delivery business and is not
planning further investment
in ride-hailing, co-founder
and senior vice president
Wang Huiwen said at a press
conference last Thursday.
The IPO books will close
on September 12. Listing is
scheduled for September 20.
Bank of America Merrill Lynch,
Goldman Sachs and Morgan
Stanley are joint sponsors for
the deal. The three banks are
also joint global coordinators
and joint bookrunners with
China Renaissance, China
Merchants Securities and UBS.
The other bookrunners
are ABC International, AMTD
Tiger, BoCom International, CMB
International, Futu Securities,
Haitong International and ICBC
International. For daily news stories
visit http://www.ifrasia.comJAPAN EXCELLENT in late August,
which is the first Green loan for
a Japanese REIT to comply with
the LMA and the Asia Pacific
Loan Market Association’s
Green Loan Principles.
On September 3, Sumitomo
Mitsui Trust Bank launched a
¥10bn Green loan for UNITED
URBAN INVESTMENT, which is
expected to attract a wide range
of investors, the bank said.
Green loans help REITs
attract lenders as the use of
proceeds is tied to acquisitions
or refinancings of buildings
with a green label from DBJ.
“About half of the listed
J-REITs have contacted us
regarding the product, so I
think we’re likely to see the
next one from the sector,” said
Mizuho’s Yamashita.
ESG POTENTIAL
Bankers see greater demand
among borrowers for ESG or
SDG-linked corporate loans
rather than Green loans, where
the use of proceeds is more
restricted.
SMBC, the arranger, will
assess Sumitomo Chemical’s
ESG and SDG-linked loan along
with Japan Research Institute,
another company in the
Sumitomo group. Pricing or use
of proceeds is not tied to the
assessments.
“Many companies prefer to
be evaluated on what they do
for ESG as a whole. In terms
of governance, I think we’re
required to look at the whole
company and evaluate rather
than cutting out only socially
good businesses,” said DBJ’s
Fukuyoshi.
Although the future for green
lending seems bright in Japan,
additional costs for borrowers
and the economic rationale for
lenders could present short-
term hurdles.
“I doubt there are loan
investors who are willing to
step up if it doesn’t make
economic sense. The ultra-low
interest rate environment in
Japan is a bottleneck and it’s
hard to put a premium on
loans,” said Munehiro Goda,
senior vice president of SMBC’s
debt finance department.
“Borrowers and lenders will
need to come to an agreement,”
he added.