Chow Tai Fook share sale brings in US$100m

PUBLISHED : Thursday, 11 July, 2013, 12:00am
UPDATED : Thursday, 11 July, 2013, 3:17am

An undisclosed institutional investor in Chow Tai Fook Jewellery raised more than US$100 million by selling a slice of the jeweller's shares after they soared 13 per cent yesterday.

The 93.9 million shares, slightly less than 1 per cent of the free float, were priced at HK$8.50, just above the floor of an indicative range of HK$8.40 to HK$8.70.

The final price represented a discount of 7 per cent to the closing price of HK$9.16, according to a term sheet obtained by the Post.

People with direct knowledge of the deal said more than 50 investors, including long-only funds and hedge funds, bought the offloaded shares.

Chow Tai Fook shares had jumped by 15.9 per cent at one point in the morning session yesterday. They closed the day up 13 per cent, the biggest one-day gain since the company went public in December 2011, after the family-controlled chain posted solid results.

The jewellery retailer's revenue grew 63 per cent in the quarter to June as mainland buyers snapped up gold products to take advantage of the drop in the price of gold since April.

Chow Tai Fook, controlled by the billionaire Cheng Yu-tung, raised HK$15.8 billion in 2011. Despite yesterday's rally, the stock is still 39 per cent below the offer price.

The retailer's same-store sales in Hong Kong and Macau rose 68 per cent in the last quarter, outpacing stores on the mainland, where sales rose 32 per cent.

The average price of items sold by Chow Tai Fook in the quarter ranged from HK$12,000 to HK$13,000, a fall from an average of HK$15,000 to HK$16,000 last year.

UBS was the sole book- runner for the deal.