Hong Kong-based conglomerate PCCW has started premarketing an ambitious HK$10bn (US$1.28bn) listing of its telecom unit as a business trust.
According to IFR, investor education began last week at a 2012 yield of 5.5%-7%, which is less than the 8%-9%…
Hong Kong-based conglomerate PCCW has started premarketing an ambitious HK$10bn (US$1.28bn) listing of its telecom unit as a business trust.
According to IFR, investor education began last week at a 2012 yield of 5.5%-7%, which is less than the 8%-9% yield that investors had expected.
In late September, the company said that the unit needed to achieve a minimum market capitalisation of HK$28.6bn (US$3.6bn) for the listing to go ahead.
It also said that the distribution for the trust was expected to be at least HK$2.574bn (US$331m), which would have meant a yield of exactly 9%.
Bookrunners have reportedly valued the trust at between HK$35bn (US$4.5bn) and HK$48bn (US$6.2bn), although PCCW itself only had a market cap of HK$21.02bn (US$2.7bn) before premarketing started.
While investors are looking for more attractive numbers, bankers on the deal have justified the yield saying that the telecom industry is more resilient to the downturn than property and infrastructure trusts, according IFR.
Premarketing is reportedly scheduled to be completed on 4 November, after which date a decision will be made on whether or not to launch roadshows depending on investors’ responses.
PCCW said that it would retain between 55% and 70% of the business trust following the listing. The disposal of a minority stake will allow Richard Li, media tycoon and chairman of PCCW, to raise money without giving up control of the fixed-line operations.
Proceeds from the transaction are expected to be used for debt repayment. Bookrunners on the deal reportedly include DBS, JP Morgan, Standard Chartered, CICC, Deutsche Bank, Goldman Sachs and HSBC.
PCCW could not be reached for comment before the press deadline.
