Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>The Offering for <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> expected to be announced today has <a href="https://www.japanpost.jp/en/ir/news/jpn/pdf/20211006_01.pdf" target="_blank" rel="noopener">materialised</a>. It is 1,027,477,400 shares or roughly ¥950bn of shares. </p><p>This is a Very Large Offering, but it is also a clean-up trade. After this, the government can sell no more without the company buying back more.</p><p>And because the government is unlikely to ever add more money to the pot, this is likely the last equity offering Japan Post Holdings will ever do. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/233/832/original/Screenshot+2021-10-06+at+8.23.48+PM.png?1633523111" class="editor-image img-responsive" data-smartkarma-image-id="233832"></figure></section><p>Separately, as I suggested in <a href="https://www.smartkarma.com/insights/japan-post-holdings-this-is-the-big-move" target="_blank" data-smartkarma-citation="insights:58429" rel="noopener">Japan Post Holdings - This Is the Big Move</a>, JPH has decided it will buy back shares. Unfortunately, the number and mechanism are less impactful than one would have hoped, but one cannot disregard. It pays to think about the flows. </p><p>So we do, below. </p>

The Offering for Japan Post Holdings (6178 JP) expected to be announced today has materialised. It is 1,027,477,400 shares or roughly ¥950bn of shares. This is a Very Large Offering, but it is also a clean-up trade. After this, the government can sell no more without the company buying back more.And because the government is unlikely to ever add more money to the pot, this is likely the last equity offering Japan Post Holdings will ever do. Separately, as I suggested in Japan Post Holdings - This Is the Big Move, JPH has decided it will buy back shares. Unfortunately, the number and mechanism are less impactful than one would have hoped, but one cannot disregard. It pays to think about the flows. So we do, below. 

Japan Post Holdings - World's Largest Cleanup Trade Announced - Story and Index Implications

<p>Last week, several news outlets (<a href="https://www.bloomberg.com/news/articles/2021-09-30/japan-plans-to-sell-8-9-billion-postal-giant-stake-in-october" target="_blank" rel="noopener">Bloomberg</a>) reported that the Japanese government had told brokerage officials that it planned on executing a sale of <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> shares to the tune of ¥1 trillion (using Tuesday's closing price as a guide), with an official announcement to be made on 6 October (this coming Wednesday). </p><p>The government currently owns ~61%, and the goal of an offering and a possible direct sale of shares back to the issuer would be to reduce the government's holding in Japan Post Holding down to just over one-third, which is the legal minimum as per the Bill to Partially Revise the Postal Privatization Law passed in 2012.</p><p>The shares fell, in anticipation of the supply to come, and have been falling since.  </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/233/344/original/Screenshot+2021-10-04+at+11.19.38+AM.png?1633317592" class="editor-image img-responsive" data-smartkarma-image-id="233344"></figure></section><p>The numbers suggest a public sale of 1,000,000,000 shares or slightly more.</p><p>Those numbers may not be right.</p><p>And the repercussions from thinking about it that way are important. </p>

Last week, several news outlets (Bloomberg) reported that the Japanese government had told brokerage officials that it planned on executing a sale of Japan Post Holdings (6178 JP) shares to the tune of ¥1 trillion (using Tuesday's closing price as a guide), with an official announcement to be made on 6 October (this coming Wednesday). The government currently owns ~61%, and the goal of an offering and a possible direct sale of shares back to the issuer would be to reduce the government's holding in Japan Post Holding down to just over one-third, which is the legal minimum as per the Bill to Partially Revise the Postal Privatization Law passed in 2012.The shares fell, in anticipation of the supply to come, and have been falling since.  The numbers suggest a public sale of 1,000,000,000 shares or slightly more.Those numbers may not be right.And the repercussions from thinking about it that way are important. 

Japan Post Holdings - This Is the Big Move

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div><p>PHC Holdings and its shareholders aim to raise around US$700m, down from US$1.8bn, via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).</p></div><div><p>PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).</p></div><div><p>We have covered the main aspects of the deal in our earlier notes<a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-many-companies-rolled-into-one" target="_blank" rel="noopener"> PHC Holdings Pre-IPO - Many companies rolled into one and </a><a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-peer-comparison" target="_blank" rel="noopener"> PHC Holdings Pre-IPO - Peer Comparison and</a> <a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-thoughts-on-valuation" target="_blank" rel="noopener">PHC Holdings Pre-IPO - Thoughts on Valuation</a>.</p></div><div><p>In this note we will talk about the IPO valuation.</p></div>

PHC Holdings and its shareholders aim to raise around US$700m, down from US$1.8bn, via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).We have covered the main aspects of the deal in our earlier notes PHC Holdings Pre-IPO - Many companies rolled into one and  PHC Holdings Pre-IPO - Peer Comparison and PHC Holdings Pre-IPO - Thoughts on Valuation.In this note we will talk about the IPO valuation.

PHC Holdings IPO - Should Have Cut the Price, Not Just the Size

<div><p>PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).</p></div><div><p>PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).</p></div><div><p>We have covered the main aspects of the deal in our earlier notes<a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-many-companies-rolled-into-one" target="_blank" rel="noopener"> PHC Holdings Pre-IPO - Many companies rolled into one and </a><a href="https://www.smartkarma.com/insights/phc-holdings-pre-ipo-peer-comparison" target="_blank" rel="noopener"> PHC Holdings Pre-IPO - Peer Comparison.</a></p></div><div><p>In this note we will talk about valuation.</p></div>

PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management (35% of FY21 revenue); Healthcare Services (37.9% of FY21 revenue); and Diagnosis/Life Science (26.1% of FY21 revenue).We have covered the main aspects of the deal in our earlier notes PHC Holdings Pre-IPO - Many companies rolled into one and  PHC Holdings Pre-IPO - Peer Comparison.In this note we will talk about valuation.

PHC Holdings Pre-IPO - Thoughts on Valuation

Resonac Holdings  / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/showa-denko-k-k" target="_blank" data-smartkarma-citation="entities:1496:1" rel="noopener">Showa Denko K.K. (4004 JP)</a> aims to raise around US$745m via a global follow-on offering. Proceeds from the placement will be used to finance its planned capex across its different business segments.</p><p>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</p>

Showa Denko K.K. (4004 JP) aims to raise around US$745m via a global follow-on offering. Proceeds from the placement will be used to finance its planned capex across its different business segments.In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Showa Denko Placement - Relatively Large Deal, past Deal Didn’t Do Well

Japan

Japan Post Holdings Co. Ltd. operates post stations, banks, and insurance business. The Company offers letters and goods transportation services, stamp sales, deposits, loans, and insurance products.

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Japan Post Holdings (6178 JP)

Japan Post Holdings - World's Largest Cleanup Trade Announced - Story and Index Implications

The Japanese govt is selling JPH shares to get to 33.3%. That will free JPH from govt "influence"/control, and may free JPB from restrictions...

Travis Lundy

Japan Post Holdings - This Is the Big Move

Japan Post Holdings (6178 JP) may see its last equity offering ever come this month. After that, I expect it to become a dividend and buyback...

Travis Lundy

PHC Holdings IPO - Should Have Cut the Price, Not Just the Size

PHC Holdings and its shareholders aim to raise around US$700m, down from US$1.8bn, via selling a mix of primary and secondary shares in its Japan IPO.

Sumeet Singh

PHC Holdings Pre-IPO - Thoughts on Valuation

PHC Holdings and its shareholders aim to raise around US$1.8bn via selling a mix of primary and secondary shares in its Japan IPO. The company is...

Sumeet Singh

Showa Denko Placement - Relatively Large Deal, past Deal Didn’t Do Well

Showa Denko K.K. (4004 JP) aims to raise around US$745m via a global follow-on offering. Proceeds from the placement will be used to finance its...

Sumeet Singh

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