* Block issuance has surged in Asia Pacific region
* Tingyi shares up 32 pct since reaching 2012 low in May
By Elzio Barreto
HONG KONG, Oct 16 (Reuters) - A Tingyi shareholder seeking to sell up to $120 million in stock cancelled the offer after investors demanded bigger discounts to buy into the largest instant noodle maker in China, two sources with knowledge of the deal said on Tuesday.
Investment banks in the Asia-Pacific region have increasingly focused on block offerings as investor interest in IPOs wanes, and while such withdrawals are unusual, there have been some of late.
The undisclosed shareholder in Tingyi (Cayman Islands) Holdings Corp had offered 38.27 million shares in a range of HK$23.75 to HK$24 each, equivalent to a discount of 1 percent to 2.1 percent to Monday's close, according to terms of the deal seen by Reuters.
"The discount was too small. If it had been priced at a 5-7 percent discount, it would have been snapped up very quickly," said Jackson Wong, Tanrich Securities' vice president for equity sales.
Shares in Tingyi, which sells noodles under the Master Kong brand and has a tie-up with PepsiCo in China, dropped 2.3 percent, compared with a 0.3 percent gain in the Hang Seng index. The stock has soared nearly 32 percent since hitting a 2012 low in late May.
Goldman Sachs was the bookrunner on the Tingyi deal. A spokeswoman for the bank in Hong Kong confirmed that the offering had not taken place but declined further comment.
Tingyi's largest shareholders, with about a one-third stake each, are privately-held Japanese company Sanyo Foods Co Ltd and Taiwanese group Ting Hsin International. Representatives for both companies were not immediately available for comment.
A Tingyi spokeswoman in Hong Kong declined to comment.
Block deals in the Asia-Pacific jumped 84 percent in the first nine months of 2012, contrasting sharply with a 57 percent tumble in IPO issuance, according to Thomson Reuters data.
As block deals are normally executed within a couple of hours, banks usually don't launch them without some level of confidence they will succeed.
But some deals have been pulled, causing embarrassment for underwriters including Credit Suisse, Morgan Stanley and Goldman Sachs.
SK Telecom Co Ltd, South Korea's top mobile operator, cancelled a $390 million sale of shares in steelmaker POSCO last month, while a shareholder of Indonesian coal miner Harum Energy pulled out of a $130 million block deal in September.
Credit Suisse and Goldman Sachs worked on the Harum Energy deal, while Citigroup, Credit Suisse, Morgan Stanley and SK Securities handled the failed SK Telecom offer, which later went through successfully with Morgan Stanley as sole bookrunner.