share sale

Companies buy back shares to funnel excess cash to shareholders and/or prop up the share price. But they can also just announce a buy-back plan, with no intention of following through, to enjoy the artificial boost to their share price that usually follows.

The Securities and Exchange Board of India is now cracking down on these phantom offers. 

It will be a rude shock for those hoping that – in typical Indian style – extensions would be given and delays accepted.

Many of India’s listed companies have scrambled to sell stock on the market this year to meet the regulator’s requirement that controlling shareholders (such as founding families or multinationals) make sure that a minimum of 25 per cent of the equity in the hands of public shareholders. But some failed to act – and with the June 3 deadline passing, they face a slew of penalties. 

Things have suddenly got tougher for Latam, the merged Lan-Tam airline which just unveiled first-quarter results.

It has a hefty $1.8bn in short-term debt and is suddenly facing heightened competition on its domestic Brazilian, international and cargo routes. No wonder it needs money.

Which explains why it is seeking to raise $1bn from shareholders by October. 

A big potential burst of liquidity for the Warsaw Stock Exchange this week following a decision by Belgium’s KBC and Spain’s Santander to sell large stakes in Bank Zachodni WBK, Poland’s third largest bank.

The total transaction could be worth as much as 5.3bn zlotys ($1.69bn), in what would be a record share offering on the Warsaw bourse, according to Bloomberg. 

Last week’s HK$24bn ($3bn) placement for China Petroleum & Chemical Corp, better known as Sinopec, was a striking deal for its sheer size. But perhaps it was most remarkable for the fact that it involved only one bookrunner.

Talk to any equity or debt capital markets banker in Asia and they will swiftly raise a familiar gripe: the trend to put far more bookrunners on a straightforward deal than ever used to be the case. 

On Thursday, the Indian government will sell off 783m shares in National Thermal Power Corporation (NTPC), a 9.5 per cent stake.

A floor price of Rs145 per share has been announced, which is a discount over the current market price. But is this a good investment? And where does it leave the government’s disinvestment plan? 

More good news for the Hong Kong Stock Exchange, this time courtesy of China Petroleum & Chemical, better known as Sinopec.

The state-owned refiner – Asia’s largest – said in a filing on Monday that it planned to sell 2.85bn “H -shares” on the HK market at a price of HK$8.45 ($1.09) in order to raise HK$23.9bn ($3.1bn).

The offer price represents a 9.5 per cent discount to the group’s closing price in HK on Monday. 

Is there life after debt?

For La Polar, Chile’s fourth-biggest retailer, the answer is yes. Last June, it was reeling from fraud scandal after admitting to having restructured about $1bn of overdue credit without informing the 400,000 customers involved.

The scandal, which shocked Chile’s solid retail sector, wiped $1bn off the company’s market value. With debts of $1bn, the 90-year-old business was staring at the prospect of bankruptcy.

Yet this week, La Polar has pulled off an ambitious capital increase. By the October 2 deadline, more than 90 per cent of the targeted $250m had been raised

Seven hours after the Indian government’s sale of a 5 per cent stake in the country’s largest oil company had ended, Delhi had declared the affair a success.

But the rampant confusion that ensued in the auction’s wake – and continued into Friday evening – bodes ill for the government’s ambitious plan to divest itself of $8bn in equity in state-owned companies to shore up its gaping fiscal deficit, to say nothing of the country’s general reputation with investors. 

Confusion reigned on Thursday during the Indian government’s ultimately successful sale of a 5 per cent stake in the country’s largest oil company.

The one-day auction – the first under a newly approved streamlined process – of 427.7m shares in Oil and Natural Gas Company ended up being 98 per cent subscribed, and raised up to $2.5bn, much needed given the country’s widening fiscal deficit. Earlier, it had seemed that the auction had floppped – as beyondbrics briefly reported (our story has been removed), as did many other media. 

Goldman Sachs is looking to off-load a chunk of its remaining stake in Industrial & Commercial Bank of China for $1.54bn as the US bank seeks to insulate itself from possible future portfolio valuation losses.

This will be the third time Goldman has sold stock in ICBC, which has seen its share price fall by about 20 per cent since October 2010. A person familiar with the situation told beyondbrics Goldman was selling the shares to avoid further accounting losses on its ICBC holding.