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6 February 2017
GlobalCapital
Goldman ups Dong sale to €874m in big week for equity blocks

Europe’s equity block trade market kicked into a higher gear this week, with a rush of deals including big trades in Lonza, Worldpay and Dong Energy. The Dong trade on Thursday night, worth Dkr6.5bn (€874m), pushes the week’s total above €3bn.

Goldman Sachs, whose merchant banking division through a vehicle called New Energy Investment is Dong’s second largest shareholder after the Danish state, came into the market after the close on Thursday for its first sale of Dong stock since the IPO last June.

The block of what was initially 22.7m shares, a 5.4% stake, was led by Goldman Sachs, Morgan Stanley and Nordea.

The leads had conducted a wallcrossing exercise which gave them visibility on 60% of the deal, and then launched the sale without a range.

By around 5pm in London, the deal was covered, a banker on the deal said. At 6.15 the leads
said orders below Dkr245 risked missing out.

The books closed at 6.45 and the block was priced at Dkr245, a 3.8% discount to the closing price of Dkr254.60.

After books closed, the leads increase the deal to 26.5m shares, making the block worth Dkr6.5bn (€874m).

The book was “pretty well concentrated,” the first banker said. The top 25 investors took more than 70% of the deal and there was a good mix of domestic and international accounts.

The sale came after Dong had released its annual report early on Thursday morning, showing 119% growth in Ebitda from continuing operations, and predicting further growth of 4% to 18%. Dong said it would become coal-free by 2023 and that it was on track to sell its oil business.

On Thursday Dong’s shares had traded above the previous close for most of the day, but dipped in the afternoon and closed 2.3% down. On Friday, they fell 1% to Dkr252.

Also launched on Thursday evening was a trade of about £27m in XLMedia, a London-listed Israeli company that provides marketing services to online gambling operators, for Webpals Enterprises. Berenberg was the bookrunner. The sale was increased to £40m, a 20% stake, and priced at 100p, a 5.7% discount.

These deals followed a slew of other transactions this week, notably a Sfr865m sale of Lonza shares on Tuesday night, led by UBS and Bank of America Merrill Lynch, as the first part of the equity financing for Lonza’s acquisition of Capsugel, announced late last year (see separate story).

Worldpay exit completed

The week’s other jumbo trade was the last sale of stock in Worldpay, the UK payments group that floated in 2015, by Advent International and Bain Capital, for£606m.

Bank of America Merrill Lynch, Morgan Stanley and Goldman launched the sale of all the private equity firms’ remaining shares at 5pm on Wednesday, at 282.75p to market, a tight maximum discount of 1.72%. Lazard advised Bain and Advent on the sale.

The block of 214.4m shares was covered in half an hour, a banker on the deal said. It was priced at 282.75р.

Worldpay’s share price is up 6.6% so far this year, but well below the peaks of about 320p in late 2015 and August 2016. The block is about a 10.7% stake in the £5.75bn company.

The book was largely driven by US investors and the top 25 accounts took 80% of the deal, the banker said.

After the £2.4bn IPO in October 2015, Advent and Bain sold £740m of stock at 269p in April 2016 and £987m at 282p in September.

The same three banks led the earlier block trades, but with Barclays as well. Barclays competed for this trade too in the auction run by Lazard, but the three IPO global coordinators were tighter.
TMK draws multinational crowd.

Another successful deal was priced on Thursday afternoon, after a 48 hour, marketed sale that had been launched on Tuesday evening.

Credit Suisse, Morgan Stanley and VTB Capital as global coordinators led the sale of 138.8m shares, a 13.4% stake, in TMK, the Russian maker of pipes for the oil and gas industry. Aton was a bookrunner.
The deal was launched without a range, but price guidance was given on Wednesday of Rb74.50 ($1.25) to market. The block was not covered by Wednesday afternoon, but by Thursday was twice covered.

“We had lots of accounts, all around the world — really good accounts,” said a banker on the deal. They were not just Russian investors, but included US and UK long-only investors and Scandinavian buyers.

On Thursday afternoon, guidance was revised to orders below Rb75 would miss, and two hours later the books closed.

The deal will be priced there, making it worth Rb10.4bn ($170m). The price is a 4.8% discount to Thursday’s close of Rb78.80 and an 11.8% discount to the 52 week high of Rb85, hit on January 27.
The shares sold had previously been given by TMK to VTB as collateral for a loan. A vehicle TMK wholly owns, Rockarrow Investments Ltd, is now buying the shares back from VTB through a call option under a cash-settled non-deliverable forward contract with VTB.

It will use the proceeds of selling the shares into the market to pay for this. The net cost of buying the shares back from VTB and settling the forward will be no higher than the proceeds of the offering.
The shares bought from VTB will be used to repay a stock loan provided to Rockarrow by TMK Steel Holding, TMK’s major shareholder.

The company, Rockarrow and TMK Steel Holding are locked up for 180 days.

“It has been a while since we have seen such demand and such constructive and positive feedback from investors toward a placement by a Russian issuer," said Dmitry Bolyasnikov, executive director of equity capital markets at VTB Capital in Moscow. "The order book was comfortably oversubscribed and was closed at a higher level compared to the initial guidance, with diversified allocations."

UK funds received about a third of the issue, Scandinavians 17% and US buyers 9%. Russian investors also had substantial demand.

"International investors are showing significant interest toward Russian assets," Bolyasnikov said. "Their risk appetite has notably increased compared to last year and such deals have great chances to be a success if they are executed at the right time in terms of news environment and company’s results.”

Hip Hueck Hooray

On Wednesday evening, as the Worldpay deal was going on, the Hueck family, which controls Hella Hueck & Co, the German maker of car lamps and electrical components, sold 2.24m shares for€83.7m through an accelerated bookbuild led by Deutsche Bank.

The sale was launched at about 4.30pm London time, after Hella’s shares had closed at €38.24, giving it a €4.2bn market cap. It was priced at €37.35, a 2.3% discount to the close on Wednesday. A banker on the deal said it had gone very well.

The shares, a 2% stake, come from the non-pooled family shareholding deemed as freefloat. A Hueck family entity holds 60% of the company.

Hella’s shares are close to their 52 week high of €39.33, reached in late January. The shares were floated in November 2014 at €26.50 and got as high as €48 the following March, before tumbling back below €30 by last June.

Citigroup led the IPO with Bankhaus Lampe, but since then Lampe and Deutsche have handled all the block trades.

Buwog spin-off furthered

The same evening, Immofinanz, the Austrian property company, sold a 4.5% stake in Buwog, the Austrian residential landlord it span off in 2014, as part of its strategic reduction of its stake.
Citigroup is bookrunner, Raiffeisen Bank International and UniCredit co-managers.

Immofinanz no longer needs the Buwog shares to back two convertible bonds it has issued, after a deal in which it incentivised conversion of its 2018 convertible.

The block of 4.5m shares was launched just after 5pm in London and covered in half an hour, a banker on the deal said. By the time the books shut at 6.45pm, the deal was “significantly oversubscribed”.
The block was priced at €21.90, a 2.1 % discount to the €22.36 closing price of Buwog on Wednesday.

Net proceeds are €97.4m.

After the transaction, Immofinanz has around 4.7m Buwog shares that it needs to underlie convertible bonds due in 2017 and 2018. Because of this, it has not committed to a lock-up.

Earlier in the week, Credit Suisse had led a sale of shares in Axel Springer, the German media group that has a €5.3bn market cap, for General Atlantic.

The block of 1.85m shares was launched at €47.65 to market, after the shares had closed at €48.72, a maximum discount of 2.2%, and was priced at that level, making the block worth €88m.

Monday night had brought a 10% accelerated capital increase for TLG Immobilien, the German real estate company, to finance the acquisition of more retail and office properties in Germany.

Bookrunners JP Morgan and UBS launched the sale of 6.7m new shares without any wall¬crossing or a price range at 4.45pm, after TLG’s shares had closed at €17.83.

The book was covered by 5.25 and later multiple times oversubscribed. At 7pm, the leads said orders below €17.20 would miss out. The books closed at 7.15pm and the €115m block was priced at €17.20, a 3.5% discount.



Corporate Communications VTB Capital