An institutional investor in China Unicom, the smaller of two mobile-telephone operators on the mainland, sought to raise up to HK$2.43 billion by selling his shares after the market close yesterday, sources said.
The investor hired JP Morgan to arrange the sale of 150 million Unicom shares at between HK$16 and HK$16.20 each, according to a sale document sent to fund managers. The pricing represents an up to 5.77 per cent discount to the stock's close of HK$16.98 yesterday.
Although the sale document did not identify the institutional investor, only South Korea's SK Telecom and Artisan Partners own more shares than the those on offer.
Shares of Unicom have gained 21.29 per cent from a low of HK$14 on November 22. The recent rebound was boosted by expectations that Beijing's long-awaited proposed industry restructuring would take place soon.
'The size of the deal is relatively small compared with the market capitalisation of Unicom. It shouldn't have any negative impact on the share price,' said China Everbright Securities analyst Wong Chi-man.
Market observers said SK Telecom could be the vendor in the share placement as it received Unicom shares at HK$8.63 each by converting US$1 billion worth of bonds issued by the mainland firm earlier this year.
There is no lock-up period for SK Telecom's stake in Unicom, and the Korean firm could reap a profit of about HK$1 billion in the placement.
Meanwhile, Unicom was holding talks with PCCW on roaming service co-operation next year using the CDMA network, executive director and vice-president Li Zhengmao said yesterday.
PCCW won the 15-year CDMA 2000 mobile licence in Hong Kong last month as its HK$70 million offer was the only bid in the tender. The company will launch the new service in November next year after the licence held by Hutchison Telecommunications International expired.
'We have touched base with PCCW after it secured the licence, and we will soon reach agreement on the roaming service to allow mainland CDMA users to enjoy the service when they are in Hong Kong,' Mr Li said.
Unicom, which was expected to bid for the Hong Kong licence, did not make the move. Mr Li said it did not make sense for Unicom to build a network from scratch in Hong Kong.
'We do want to have a CDMA network in Hong Kong, but we are not familiar with the local market. It would be too risky to make such investment,' Mr Li said.
He said the company's Macau CDMA operation would make profit in two to three years after the service was launched last year.
'Macau is a small market so only limited investment was made to build the network,' he said.
Unicom has rallied on expectations an industry revamp may come soon
The amount an institutional investor seeks to raise by placing 150 million China Unicom shares, in HK$: $2.4b
Since declining to a low of HK$14 on November 22, shares of the mainland mobile operator have gained: 21.3%