IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

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<a href="https://www.smartkarma.com/entities/irongate-group" target="_blank" data-smartkarma-citation="entities:30897:1" rel="noopener">Irongate Group (IAP AU)</a> has entered into an SIA with Charter Hall and PGGM. The offer of A$1.90 and maximum FY22 distribution of 4.67 cents implies a total of A$1.9467.   </li>
<li>The scheme booklet will be dispatched in May with an implementation date in late July. The offer price is attractive in terms of multiples and security prices. </li>
<li>At the last close and for the July-end implementation date, the gross and annualised spread of the total offer is 1.4% and 4.2%, respectively.   </li>
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Irongate Group (IAP AU) has entered into an SIA with Charter Hall and PGGM. The offer of A$1.90 and maximum FY22 distribution of 4.67 cents implies a total of A$1.9467.   
The scheme booklet will be dispatched in May with an implementation date in late July. The offer price is attractive in terms of multiples and security prices. 
At the last close and for the July-end implementation date, the gross and annualised spread of the total offer is 1.4% and 4.2%, respectively.   


Irongate Enters into an SIA with Charter Hall and PGGM

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

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After ARA Asset Management <a href="https://www.asx.com.au/asxpdf/20180308/pdf/43s8dgxs8plthf.pdf" target="_blank" rel="noopener">acquired</a> a 19.5% stake in <a href="https://www.smartkarma.com/entities/cromwell-property-group" target="_blank" data-smartkarma-citation="entities:2780:1" rel="noopener">Cromwell Property (CMW AU)</a> on the 7 March 2018, the relationship between the two became increasingly acrimonious. This was discussed in <a href="https://skr.ma/x55u7" target="_blank" rel="noopener">Cromwell/ARA: A Festering Relationship</a>.
ARA finally <a href="https://www.asx.com.au/asxpdf/20200623/pdf/44jw1gy2d3dqg4.pdf" target="_blank" rel="noopener">announced</a> a proportional off-market takeover bid to acquire 29% of shares out in CMW, not already owned, which subsequently turned <a href="https://www.asx.com.au/asxpdf/20200824/pdf/44lsvxks2gjc60.pdf" target="_blank" rel="noopener">unconditional</a>, and ARA proceeded to appoint its own people to the board - appointments that had previously been blocked by Cromwell.
On the 4 August, <a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> <a href="https://links.sgx.com/FileOpen/202108_01%20Major%20and%20Connected%20Transaction%20in%20Relation%20to%20the%20Proposed%20Acquisition%20of%20ARA%20Asset%20Managament%20Limited.ashx?App=Announcement&amp;FileID=677405" target="_blank" rel="noopener">announced</a> it was acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn. (<a href="https://skr.ma/fJECF" target="_blank" rel="noopener">ESR Cayman (1821 HK) Takes Out ARA Asset Management</a>)
On the 14 October, <a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934:1" rel="noopener">ESR-REIT (EREIT SP)</a> and <a href="https://www.smartkarma.com/entities/ara-logos-logistics-trust" target="_blank" data-smartkarma-citation="entities:937:1" rel="noopener">ARA LOGOS (ALLT SP)</a> (ALOG) <a href="https://links.sgx.com/FileOpen/ALOG%20-%20Joint%20Announcement%20-%20Proposed%20Merger%20with%20ESR-REIT%20by%20way%20of%20a%20Trust%20Scheme%20of%20Arrangement.ashx?App=Announcement&amp;FileID=686935" target="_blank" rel="noopener">proposed</a> a S$1.4bn merger, where ESR-Reit will acquire all of ALOG's units in a cash &amp; scrip transaction by way of a Scheme - see <a href="https://skr.ma/wqrQU" target="_blank" rel="noopener">ARA Logos (ALLT SP) To Merge with ESR-REIT (EREIT SP)</a>. ALOG is managed by ARA LOGOS Logistics Trust Management Limited, a wholly-owned subsidiary of LOGOS. ARA Asset Management Limited is a majority shareholder of LOGOS, which operates as ARA’s logistics real estate platform. ESR Funds Management Limited, the manager of ESR-Reit, is owned by ESR Cayman Limited (67.3%).
On Irongate
Back on the 28 January of this year, <a href="https://www.smartkarma.com/entities/360-capital-reit" target="_blank" data-smartkarma-citation="entities:29046:1" rel="noopener">360 Capital REIT (TOT AU)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02335484-2A1277317?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">acquired</a> a 9.18% stake in <a href="https://www.smartkarma.com/entities/irongate-group" target="_blank" data-smartkarma-citation="entities:30897:1" rel="noopener">Irongate Group (IAP AU)</a> for $78.6mn, or ~A$1.40/security.  Together with <a href="https://www.smartkarma.com/entities/360-capital-group-ltd" target="_blank" data-smartkarma-citation="entities:11865:1" rel="noopener">360 Capital (TGP AU)</a>, that stake was bumped to 15.08% on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02361516-2A1291600?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">8 April</a>, 16.26% on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02380390-2A1301075?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">28 May</a>, 17.34% on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02384090-2A1303268?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">9 June</a>, &amp; 19.11% on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02398322-2A1311372?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">20 July</a>. This was split 12.84% &amp; 6.27% between TOT &amp; TGP. 
IAP also placed out 34mn shares at A$1.47/security on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02384942-2A1303629?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">16 June</a>. 
An AGM notice was issued on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02401181-2A1312628?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">30 July</a>, in which it detailed 360 Capital's nomination of Tony Pitt and James Storey to the board. The board recommended shareholders vote against these two board nominations. 360 Capital attempted to withdraw its nominations on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02413122-2A1318981?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">26 August</a>, but IAP said it was too late. At the AGM on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02415982-2A1320409?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">31 August</a>, those two appointments were voted down. 
The New News
IAP <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02436879-2A1331471?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> this morning it has it received an unsolicited, highly conditional, and indicative non-binding proposal from 360 Capital REIT and <a href="https://www.smartkarma.com/entities/360-capital-group-ltd" target="_blank" data-smartkarma-citation="entities:11865:1" rel="noopener">360 Capital (TGP AU)</a>, the REIT's largest shareholder, by way of a Scheme.
The consideration price is A$1.6047/security, in cash, or a headline price of A$1.65 less the anticipated distribution of A$0.0453/security for the half-year ended 30 September 2021.
360 Capital currently holds 128.97mn securities or 19.99%. 
The indicative proposal is also conditional on "one or more of ESR Real Estate (Australia) Pty Ltd or its affiliate’s managed funds (together, ESR Australia) entering into an agreement with 360 Capital to purchase an undisclosed number of selected assets from IAP’s portfolio on terms yet to be agreed".
Hardly a clean approach. This is leaning towards a Hostile Offer. 
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More below the fold.
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After ARA Asset Management acquired a 19.5% stake in Cromwell Property (CMW AU) on the 7 March 2018, the relationship between the two became increasingly acrimonious. This was discussed in Cromwell/ARA: A Festering Relationship.
ARA finally announced a proportional off-market takeover bid to acquire 29% of shares out in CMW, not already owned, which subsequently turned unconditional, and ARA proceeded to appoint its own people to the board - appointments that had previously been blocked by Cromwell.
On the 4 August, ESR Cayman (1821 HK) announced it was acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn. (ESR Cayman (1821 HK) Takes Out ARA Asset Management)
On the 14 October, ESR-REIT (EREIT SP) and ARA LOGOS (ALLT SP) (ALOG) proposed a S$1.4bn merger, where ESR-Reit will acquire all of ALOG's units in a cash &amp; scrip transaction by way of a Scheme - see ARA Logos (ALLT SP) To Merge with ESR-REIT (EREIT SP). ALOG is managed by ARA LOGOS Logistics Trust Management Limited, a wholly-owned subsidiary of LOGOS. ARA Asset Management Limited is a majority shareholder of LOGOS, which operates as ARA’s logistics real estate platform. ESR Funds Management Limited, the manager of ESR-Reit, is owned by ESR Cayman Limited (67.3%).
On Irongate
Back on the 28 January of this year, 360 Capital REIT (TOT AU) acquired a 9.18% stake in Irongate Group (IAP AU) for $78.6mn, or ~A$1.40/security.  Together with 360 Capital (TGP AU), that stake was bumped to 15.08% on the 8 April, 16.26% on the 28 May, 17.34% on the 9 June, &amp; 19.11% on the 20 July. This was split 12.84% &amp; 6.27% between TOT &amp; TGP. 
IAP also placed out 34mn shares at A$1.47/security on the 16 June. 
An AGM notice was issued on the 30 July, in which it detailed 360 Capital's nomination of Tony Pitt and James Storey to the board. The board recommended shareholders vote against these two board nominations. 360 Capital attempted to withdraw its nominations on the 26 August, but IAP said it was too late. At the AGM on the 31 August, those two appointments were voted down. 
The New News
IAP announced this morning it has it received an unsolicited, highly conditional, and indicative non-binding proposal from 360 Capital REIT and 360 Capital (TGP AU), the REIT's largest shareholder, by way of a Scheme.
The consideration price is A$1.6047/security, in cash, or a headline price of A$1.65 less the anticipated distribution of A$0.0453/security for the half-year ended 30 September 2021.
360 Capital currently holds 128.97mn securities or 19.99%. 
The indicative proposal is also conditional on "one or more of ESR Real Estate (Australia) Pty Ltd or its affiliate’s managed funds (together, ESR Australia) entering into an agreement with 360 Capital to purchase an undisclosed number of selected assets from IAP’s portfolio on terms yet to be agreed".
Hardly a clean approach. This is leaning towards a Hostile Offer. 


More below the fold.


Irongate (IAP AU): 360 Capital's Tilt Reminiscent Of ARA/Cromwell Stoush

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<a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> has <a href="https://links.sgx.com/FileOpen/202108_01%20Major%20and%20Connected%20Transaction%20in%20Relation%20to%20the%20Proposed%20Acquisition%20of%20ARA%20Asset%20Managament%20Limited.ashx?App=Announcement&amp;FileID=677405" target="_blank" rel="noopener">announced</a> it is acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn.
Under the terms of the US$5,192mn transaction, ESR will issue US$4.7bn via new ESR shares (US$4.286mn) and vendor loan notes (US$387mn); and US$519mn in cash, to be funded by a US$250mn placement to SMBC, and the remainder (US$269mn) in debt. The scrip/cash split is 90/10.
All of the ARA shareholders are rolling over their shares  - and will mostly be subject to a six-month lock-up - and will hold ~28% of the enlarged entity at completion.
The transaction requires the approval from ESR shareholders by way of an ordinary resolution. Irrevocables totaling 4.6%, to vote in favour of the deal, have been received from ESR's founders, together with OMERS and <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>.
There are various pre-conditions attached to the deal, with an EGM expected to be convened before 31 October. The deal may be wrapped up late 4Q21, early 1Q22.
Much more below the fold. 
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ESR Cayman (1821 HK) has announced it is acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn.
Under the terms of the US$5,192mn transaction, ESR will issue US$4.7bn via new ESR shares (US$4.286mn) and vendor loan notes (US$387mn); and US$519mn in cash, to be funded by a US$250mn placement to SMBC, and the remainder (US$269mn) in debt. The scrip/cash split is 90/10.
All of the ARA shareholders are rolling over their shares  - and will mostly be subject to a six-month lock-up - and will hold ~28% of the enlarged entity at completion.
The transaction requires the approval from ESR shareholders by way of an ordinary resolution. Irrevocables totaling 4.6%, to vote in favour of the deal, have been received from ESR's founders, together with OMERS and JD.com Inc. (9618 HK).
There are various pre-conditions attached to the deal, with an EGM expected to be convened before 31 October. The deal may be wrapped up late 4Q21, early 1Q22.
Much more below the fold. 


ESR Cayman (1821 HK) Takes Out ARA Asset Management

Equity Bottom-Up

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<a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> (STR) has a 22.06% stake in ARA Asset Management, after adding 1.1% in <a href="https://links.sgx.com/FileOpen/R706A%20Announcement.ashx?App=Announcement&amp;FileID=627835" target="_blank" rel="noopener">May</a> of last year for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.  STR's stake in ARA, based on that stake increase, is worth ~60% of its current market cap. Yet that figure is likely conservative based on the increase in ARA's AUM. 
Yesterday ARA <a href="https://ara.listedcompany.com/newsroom/ARAPress_Release_SMBC0Joins-ARAasStrategicShareholder_17052021.pdf" target="_blank" rel="noopener">announced</a> a $500mn round of equity financing from SMBC. With SMBC joining as a strategic shareholder, this has all the hallmarks of an imminent IPO.
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STR is cheap. Either major shareholder Tecity takes the company private; or you buy the company as an indirect investment into an expected listing of ARA. 
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As always, more below the fold.
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Straits Trading (STRTR SP) (STR) has a 22.06% stake in ARA Asset Management, after adding 1.1% in May of last year for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.  STR's stake in ARA, based on that stake increase, is worth ~60% of its current market cap. Yet that figure is likely conservative based on the increase in ARA's AUM. 
Yesterday ARA announced a $500mn round of equity financing from SMBC. With SMBC joining as a strategic shareholder, this has all the hallmarks of an imminent IPO.


STR is cheap. Either major shareholder Tecity takes the company private; or you buy the company as an indirect investment into an expected listing of ARA. 


As always, more below the fold.


Straits Trading: ARA's Pre-IPO Funding From SMBC

Back on the 14 August 2020, <a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> announced its <a href="https://straitstrading.listedcompany.com/newsroom/20200814_171924_S20_ETSA0B9VKYMLZIBA.2.pdf" target="_blank" rel="noopener">1H20 result</a>s, which showed a 62.9/87.5% decline yoy in EBITDA and EPS, due in part to lower average tin prices and lower sales quantity of refined tin; and the knock on-effects from COVID-19 to its hospitality operations.
Tin prices are up 38% since the March low and 10% since  30 June. There are signs of life in the hospitality front, with talk of bubble travel between countries, which may indicate operational losses have troughed.
But of more interest is STR's 22.06% stake in ARA Asset Management. STR added 1.1% in <a href="https://links.sgx.com/FileOpen/R706A%20Announcement.ashx?App=Announcement&amp;FileID=627835" target="_blank" rel="noopener">May</a> of this year at for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.
STR's stake in ARA, based on its recent stake increase, is worth around the same as its current market cap - indicating the market is assigning almost zero value for the remaining real estate, hospitality segment, and the 54.8% stake in <a href="https://www.smartkarma.com/entities/malaysia-smelting-corp-bhd" target="_blank" data-smartkarma-citation="entities:14425:1" rel="noopener">Malaysia Smelting Corp (SMELT MK)</a>, and stake in <a href="https://www.smartkarma.com/entities/suntec-reit" target="_blank" data-smartkarma-citation="entities:151:1" rel="noopener">Suntec REIT (SUN SP)</a>.
Illiquid, depressed pricing, with a potential major catalyst in the pipeline, this appears ripe for Tecity to take the company private.
As always, more below the fold.

Back on the 14 August 2020, Straits Trading (STRTR SP) announced its 1H20 results, which showed a 62.9/87.5% decline yoy in EBITDA and EPS, due in part to lower average tin prices and lower sales quantity of refined tin; and the knock on-effects from COVID-19 to its hospitality operations.
Tin prices are up 38% since the March low and 10% since  30 June. There are signs of life in the hospitality front, with talk of bubble travel between countries, which may indicate operational losses have troughed.
But of more interest is STR's 22.06% stake in ARA Asset Management. STR added 1.1% in May of this year at for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.
STR's stake in ARA, based on its recent stake increase, is worth around the same as its current market cap - indicating the market is assigning almost zero value for the remaining real estate, hospitality segment, and the 54.8% stake in Malaysia Smelting Corp (SMELT MK), and stake in Suntec REIT (SUN SP).
Illiquid, depressed pricing, with a potential major catalyst in the pipeline, this appears ripe for Tecity to take the company private.
As always, more below the fold.

Australia

Cromwell Property Group is a property and funds manager. The Company, through its subsidiary, provides funds management, property transactions, property and facilities management, finance, compliance, debenture issues, and debt management.

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Cromwell Property (CMW AU)

Irongate Enters into an SIA with Charter Hall and PGGM

Irongate has entered into an SIA with Charter Hall/PGGM. The offer of A$1.90 and the max dist of 4.67 cents implies a total of A$1.9467. For the...

Arun George

Irongate (IAP AU): 360 Capital's Tilt Reminiscent Of ARA/Cromwell Stoush

$1.65/security appears a fair price - IAP stops short of saying otherwise. But this is not a clean Offer, nor is it friendly. Despite the non...

David Blennerhassett

ESR Cayman (1821 HK) Takes Out ARA Asset Management

This looks like a great deal for ESR. But the company looks full here compared to historical metrics. Plus there is an indication of further...

David Blennerhassett

Straits Trading: ARA's Pre-IPO Funding From SMBC

Based on the Scheme value of ARA,, ARA is potentially worth upwards of S$6bn. That backs out a value of S$1.3bn for STR's stake, ~30% above its...

David Blennerhassett

Straits Trading - Ripe For Privatisation

Stratis Trading is a buy ahead of a potential re-rating from an ARA IPO, and the recovery in underlying real estate and tin ops.

David Blennerhassett

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