Chailease Holding Company Limited’s US$206mm Global Depositary Receipts (GDR) offering
On 9th October 2012, Chailease Holding Company Limited (“Chinalease or the Company”, TWSE ticker: 5871) successfully priced its US$206mm GDR offering. The deal offered 24,000,000 GDR, representing 120,000,000 shares of common stock, or 13.3% of the Company’s issued equity capital, and was priced at US$8.59 per GDR. The offering price is 4.7% discount to the 30-trading-day VWAP of the Company. The GDR will be listed on the Luxemburg Stock Exchange.
Chailease will use the proceeds from the offering to strengthen the working capital of its subsidiaries in Taiwan and the PRC to expand their businesses across the Straits while solidifying its financial structure. Chailease is the market-leading leasing company in the Greater China and emerging Asia as an industry leader in Taiwan with more than 30 years of experience. In recently years, it set its eyes on the mainland market and actively expanded the businesses and operations. Currently, it has become the largest foreign leasing company in China. In 1H 2012, the profit contribution from the PRC market for the Company has exceeded 25% and is expected to continue to grow going forward. Taiwan and the PRC markets will be the two engines supporting the Company’s future development. The GDR offering will fund the financing needs for the rapid growth of the Company’s segments across the Straits, effectively increase its financial flexibility and improve its capital structure while maintaining a reasonable dilution level. Moreover, the GDR offering will diversify the Company’s financial sources to attract international investors for its growth and further increase its visibility in the global capital market.
Global capital markets have been rather buoyant recently encouraged by the 3rd round of QE from the Federal Reserve and the renewed bond purchase program by the European Central Bank, luring substantial amount of liquidity flowing into the financial markets, and investors are actively looking for quality investment opportunities. With more visible benefits from the Company’s overseas expansion and a continued growth in earnings, Chailease’s solid performance results have made it become a highly appealing investment target. In addition, proactive communication with investors have boosted investor confidence in the Company’s future growth momentum and enabled a 100% increase in its stock price less than one year after the company was listed. The company’s share price doubled with the broader market up 7.4% YTD. The deal timed the optimal offering window on the back of a favorable market environment, allowing Chailease to cover the book fast in spite of two other offerings scheduled for same time launch in Asian markets. The deal received orders from over 30 international institutional investors within less than 5 hours and was successfully priced while Chailease’s share price is traded high (the last closing price of NT$54.00 per share on October 9th is 96.4% of Chailease’s all-time-high share price post-IPO of NT56.00 per share). Also, the offering price is significantly higher than the indicative price of NT$43.00 per share filed for the domestic regulatory approval. The deal perfectly marks the first equity offering after Chailease’s listing in TWSE.
J.P. Morgan acted as the Global Coordinator and Joint bookrunner, together with Morgan Stanley, of the transaction. This transaction was the second GDR issuance led by J.P. Morgan in two weeks immediately after J.P. Morgan successfully completed the TPK’s US$466mm GDR and convertible bonds combined issuance, which reaffirmed J.P. Morgan’s leadership in Taiwan’s overseas financing market.
