Hutchison Port Holdings Trust fell on its trading debut following the world’s largest initial public offering this year, as investors sold units priced before an earthquake in Japan roiled Asian markets.
The container-terminal owner, backed by billionaire Li Ka-shing, dropped 5.9 percent to close at 95 cents. Units were sold at $1.01 in the $5.5 billion IPO, which was priced on March 11, the day of the temblor.
The MSCI Asia Pacific Index was set for its biggest weekly drop since May as investors offloaded stocks on concerns electricity shortages and radiation leaks from a crippled nuclear-power plant may disrupt production in Japan. HPH Trust owns container terminals in Hong Kong and neighboring Shenzhen.
“Given the weak market sentiment, I’m not surprised at the performance,” said Ng Soo Nam, a Singapore-based chief investment officer at Nikko Asset Management Co., which oversaw $126 billion in assets globally as of Dec. 31. “It will eventually rebound as Hutchison Port generates solid cash flow.”
Nikko Asset bought some Hutchison Port units in the IPO, Ng said, without elaboration. The trust sold about 5.4 billion units in the offering. The price range was initially set at 91 cents to $1.08 before being narrowed to 99 cents to $1.03, according to term sheets.
“Considering the situation, I think it’s excellent,” trust Chairman Canning Fok said about the price movement at a listing ceremony in Singapore. The earthquake’s “impact is minimal” on the trust’s assets, he said.
The trust’s terminals handled a record 21.2 million 20-foot containers last year, 17 percent more than in 2009. The trust has room to develop 12 more berths in Shenzhen’s deepwater Yantian port, with the first three expected to be completed by 2015, Ivor Chow, chief financial officer of the trust’s manager, said at a Singapore press briefing last week.
Cornerstone investors including Capital Research & Management Co., Paulson & Co. and Singapore’s Temasek Holdings Pte invested $1.62 billion in the trust’s IPO, according to the prospectus filed with the Monetary Authority of Singapore. DBS Group Holdings Ltd., Deutsche Bank AG and Goldman Sachs Group Inc. managed the sale.
“This sell-off should be temporary,” said Wong Sui Jau, general manager of Fundsupermart, the online division of IFAST Financial Pte, which manages $2.8 billion. “The sell-off has made it more attractive considering that the fundamentals haven’t changed much.”
Hong Kong and Shenzhen, in China’s Pearl River Delta, form the world’s busiest container market, Hong Kong-based Hutchison Whampoa said in a Jan. 18 statement. Hutchison Whampoa, controlled by billionaire Li, kept about 25 percent of the trust and will manage it.
Hutchison Whampoa rose 0.1 percent to HK$84.85 in Hong Kong. It’s dropped 8.5 percent since March 10, the last full day of trading before the earthquake.
The company, the world’s largest container-terminal operator, also invests in drug stores, real estate and mobile-phone services.