CVC among shareholders raising up to $750 mln in HKBN’s IPO

At the top of its indicative range, the IPO would be the second-largest in the Asia-Pacific region so far in 2015, after the $1.13 billion raised by Jasmine International PCL’s Internet infrastructure fund in Bangkok in early February.

Private equity firm CVC, HKBN’s management and other shareholders will offer 645 million existing shares in an indicative range of HK$8 to HK$9 each, putting the total deal at up to HK$5.8 billion ($750 million), added the sources, who couldn’t be named because details of the deal aren’t yet public.

The company received a $200 million commitment from Canada Pension Plan Investment Board, who will be a cornerstone investor for the IPO, Thomson Reuters publication IFR reported, citing a source familiar with the float. The pension fund was not immediately available to comment.

The IPO has also drawn about 40 so-called anchor investors, including hedge funds and long-only funds, a separate source said.

The price range is equivalent to a 2015 forecast enterprise multiple, which takes into consideration HKBN’s enterprise value and its earnings before interest, taxes, depreciation and amortisation (EBITDA) of 10.5 to 11.4 times, IFR said.

The price range also corresponds to a forecast yield of 4.8 percent to 5.4 percent for 2015, sources added. By comparison, HKBN’s bigger rival HKT Trust, has a yield of about 5.1 percent.

“The low interest-rate environment is getting investors focused on the yields,” one of the sources said.

The IPO is set to be priced on March 4.

HKBN, previously known as Hong Kong Broadband Network, will raise no funds from the IPO.

The company declined to comment on the IPO details.

CVC bought HKBN from Hong Kong Television Network Ltd in May 2012 for HK$4.87 billion. The private equity firm three months later sold a $40 million stake to Singapore fund GIC and a $29 million stake to AlpInvest Partners, a unit of Carlyle Group LP.

CVC owns 70.7 percent of the holding company for HKBN, with GIC controlling 11.3 percent and AlpInvest 8.1 percent.

Goldman Sachs, JPMorgan and UBS were hired as joint sponsors and joint global coordinators for the IPO, with CLSA and HSBC also acting as joint bookrunners, IFR added.

Rothschild was hired as a financial adviser, according to HKBN’s preliminary IPO prospectus.

($1 = 7.7567 Hong Kong dollars)

(Reporting by Fiona Lau of IFR and Elzio Barreto; Editing by Michael Perry, Stephen Coates and Muralikumar Anantharaman)