The drug manufacturing arm of Korean conglomerate Samsung Group started the deal on a strong footing thanks to plenty of investor interest ahead of launch. And after kicking off bookbuilding, demand flew in, with orders coming in size.
“The deal could have been placed with just two investors,” said a ECM syndicate banker on the deal. “Some investors were putting in orders of up to $800m, so the company could have picked its own line-up if it wanted.”
BioLogics offered 16.54m shares — 11.03m primary shares and 5.51m secondary put up by Samsung Electronics — at W113,000-W136,000 apiece. The float represents 25% of the issuer’s enlarged capital and has no greenshoe available.
Joint lead managers Citi, Credit Suisse, JP Morgan, Korea Investment & Securities and NH Investment & Securities began taking orders for the deal on October 17. The team was able to quickly cover the IPO on the very first day after a strong conversion rate during roadshows, said another banker close to the trade.
What was interesting was the quality of investors in the deal, said the ECM syndicate banker. “This is the highest quality book we have seen since Alibaba’s IPO. And the orders were better than those placed for the ZTO Express IPO — there were large, specific orders from top long-only funds.”
China's ZTO priced its US listing on Wednesday, raising $1.4bn. But it had a torrid debut on Thursday with the stock dropping 15% from the IPO price.
Bookbuilding for BioLogics wrapped up on Thursday with over 140 lines in the final book, allowing the leads to price the deal at W136,000 per share, the top of guidance. The ECM syndicate banker added that the issuer could have priced above the range if it wanted. But it opted for a prudent approach.
"Samsung wanted their reputation to be good in Korea, especially as they have had lots of bad news recently," he said. "They have used capital markets a lot in the past to restructure their business and BioLogics is the jewel of the business."
This is despite the fact that the issuer has made no profit this year. But investors rushed for a slice of the pie because of the company’s growth prospects.
“In three years it is going to be the biggest [contract manufacturing organisation] in the world,” said the syndicate banker.
Allocations continued through the Thursday night and were still being worked out on Friday evening. BioLogics is planning to use the proceeds for capital expenditure on its third large-scale manufacturing plant, additional investment in Samsung Bioepis, expansion of business and general working capital.
Its IPO is the biggest in South Korea since April 2010 when Samsung Life Insurance Co listed for $3.5bn, according to Dealogic. BioLogics' deal followed Doosan Bobcat’s failed attempt to float earlier this month. But it has refiled for a second try and is set to return next week with a W991bn float, chopped from the original W2tr target.
BioLogics' shares will be listed on the Kospi on November 10. There is a voluntary lock-up of 180 days on the company and the selling shareholder.
The deal has given BioLogics a market capitalisation of W9tr.