A Puzzling Stake Sale
One Equity Partners, a major shareholder of Celltrion Healthcare Co., has sold a 4.5 percent stake, or 6.50 million shares, in the firm for 390.6 billion won (US$327.05 million).
One Equity Partners is the private equity arm of JPMorgan Chase. In September last year, it raised 400 billion won by selling a 3 percent stake (4.5 million shares) in Celltrion Healthcare. Despite the two rounds of stake sale, it still is the second largest shareholder of Celltrion Healthcare with more than a 10 percent stake.
One Equity Partners carried out demand forecasting for a block deal with institutional investors right after the stock market closed on May 20. UBS Securities Co. was the leading sale manager. It presented a discount rate of 5.1 percent to 8 percent on the closing price of 65,300 won (US$54.64). The actual discount rate applied to the block deal was 8 percent.
The IB industry is wondering why One Equity Partners sold 11 million shares of Celltrion Healthcare during eight months. The latest block deal surprised market watchers as it came just a few days after Celltrion Group chairman Seo Jung-jin unveiled his vision to invest 40 trillion won by 2030 to overtake Pfizer, the world’s largest pharmaceutical company.
Furthermore, One Equity Partners said last year that it would invest in Celltrion Healthcare in a medium to long term. It said the purpose of the first block deal last year was mainly to retrieve its early investment in 2012. “We will maintain more than a 15 percent stake in Celltrion Healthcare,” the company said at the time.
An official from a domestic institutional investor said, “Generally, financial investors exit investment via a block deal to realize a profit when stock prices go up. In this light, One Equity Partners’ stake sale is puzzling as Celltrion Healthcare’s share price has recently slid down.” Celltrion Healthcare’s share price plunged more than 9 percent from the beginning of the year.