GLOBAL EQUITY/DRS
Aer Lingus, Irelands state airline, bucked worries over high fuel prices and potential terrorist threats to post an 8% gain in its first day of trading on the London Stock Exchange on October 2. It was the first airline issue on the exchange since EasyJets initial public offering six years ago.
The low-fare, Dublin-based airlines shares were priced at the low end of the expected range, helping to ensure a smooth takeoff for the IPO, which was eight years in the planning stages.
The partial privatization raised $1.5 billion to help fund an expansion of the airlines fleet and to shore up its pension fund. The Irish government retained a 28% holding in the carrier, which is buying new long- and short-haul aircraft to enable it to add new routes. Those expansion plans depend, however, on the ratification of an open-skies agreement between the United States and the European Union, which was negotiated in November 2005 and could be finalized in December.
Goldman Sachs, Merrion Stockbrokers and AIB Corporate Finance advised Aer Lingus on the IPO. UBS, Goodbody Stockbrokers and AIB Capital Markets advised the Irish government.
Aer Lingus rejected a $1.9 billion offer on October 5 from competitor Ryanair. The Irish government also refused to sell its remaining stake. Ryanair, Europes largest low-cost airline, offered E2.8 in cash per share versus the E2.2 price tag at which Aer Lingus listed on the London and Dublin stock markets.
London-listed IPOs in the year-to-date as of September 27 totaled $30.9 billion, an increase of 121% compared to the same period a year earlier, according to Dealogic.
On the other side of the world, as Global Finance went to press, Chinas biggest bank, Industrial & Commercial Bank of China, or ICBC, was preparing to raise as much as $21.9 billion in its initial share sale in Hong Kong and Shanghai. The issue appeared likely to be the worlds biggest IPO ever. The previous record was an $18.4 billion NTT Mobile Communications Network stock offering in 1998, according to Dealogic. Bank of China raised $11.2 billion in its May 24, 2006, IPO.
The ICBC offering was the last of the big share sales by Chinas banks before the country opens up its banking system to foreign competition in December, as required by the agreement that allowed China to join the World Trade Organization. Merrill Lynch, Credit Suisse, Deutsche Bank, China International Capital and ICBCs investment banking unit ICEA Capital are managing the global offering.
Qimondas American depositary shares are equivalent at a 1-to-1 ratio to its ordinary shares, which are not listed in overseas markets. As a subsidiary of Infineon, Qimonda had net sales of $3.5 billion in fiscal 2005. It mainly serves the personal computer and server markets.
The Bank of New York was appointed as depositary for KazMunaiGas for its Regulation S offering of DRs for shares listed on the London Stock Exchange. The Kazakhstan-based oil and gas producer raised more than $2 billion from its IPO on the Kazakhstan Stock Exchange and listing of global depositary receipts in London.
Tomra Systems, based in Norway, selected The Bank of New York as depositary for its Level I ADR program in the US over-the-counter market. The company makes reverse vending machines, which collect empty beverage containers for recycling and issue refunds. It also designs and operates recycling centers.
Gordon Platt
