Through a combination of a global IPO of American Depository Receipts (ADRs) and a domestic offering of common shares, Taiwan’s Ministry of Transportation and Communication (MOTC) sold down $1.58bn of its stake in Chunghwa Telecom. Previous attempts to sell down the MOTC stake had proved unsuccessful because of weak equity markets and little appetite for telecom stocks.
To maximise global investor demand, the offer was structured as a Global IPO of ADRs, complete with a public offer without listing to tap Japanese liquidity, with a dom-estic auction of common shares.
Marketing focused on the firm’s attractive fundamentals relative to its peers, but included structural enhancements such as a commitment to maintain a 90% dividend payout ratio; a 7% to 10% share repurchase by the end of 2003; and a delay to the 2002 dividend record date to enable ADR investors to participate.
As a result, gross demand in excess of $4bn was gener-ated, with the deal pricing at a tight 2% discount to the local close of the common shares.
