Qin Jia Yuan outshines Dah Sing
Retail investors underline the market's mixed response to the public offerings
Mainland media services firm Qin Jia Yuan Media Services received overwhelming response from retail investors to its initial public offering of up to $148 million.
It even drew more cash from retail investors than fellow listing candidate Dah Sing Banking Group which is tapping the market for $2.3 billion to $2.5 billion.
According to a source, Qin Jia Yuan's retail tranche was 87 times subscribed, freezing $1.28 billion in cash based on the top end of its indicative $1.08 to $1.48 price range.
Despite its much larger offering size, Dah Sing Banking only managed to attract $958 million worth of cash for its retail tranche, which ended up being 3.8 times covered, according to another source.
'Retail investors seem to be enticed to Qin Jia Yuan because of news that many tycoons are subscribing to the shares, even though most of them are not convinced by the spin-off story of Dah Sing,' one broker said.
Market sources did not have any information on the subscription rate for the institutional portion of Qin Jia Yuan's offer but expected that it was very well covered.
The retail offerings of Qin Jia Yuan and Dah Sing Banking both closed at noon yesterday and are expected to be priced today.
Given the strong response to Qin Jia Yuan, observers expect the issue to be priced in the mid-to-top part of the range. Market rumours suggested it would price at $1.28.
Dah Sing Banking was expected to be priced in the bottom part of its indicative range between $12.66 and $13.86, market watchers said.
Sources said the relatively weak response to Dah Sing Banking was partly due to a wide choice for investors who want exposure to the local banking sector. The fact that Dah Sing Financial will remain the single largest shareholder of the new banking assets, which account for close to 90 per cent of its revenue, also means investors who like the assets do not necessarily have to buy them outright.
'You have one group of investors who already hold Dah Sing Financial who are asking themselves why they need to buy it again, and then there is another group who have no shares in Dah Sing Financial and therefore see no reason to buy in this offer,' one source said.
Still, the institutional book was said to have been building steadily throughout the offer period, and even before it closed at the end of London trading yesterday, the deal was fully covered.
Both Dah Sing Banking and Qin Jia Yuan will be listed on the main board next Wednesday. HSBC and CLSA are leading the Dah Sing Banking IPO. Qin Jia Yuan's offer is arranged by DBS Asia Capital.
