Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p data-v-da61000a="" data-v-294dc056="">This update is the latest in a series dating back to <a href="https://skr.ma/c7hcH" target="_blank" rel="noopener">L<em>egend's Conversion of Domestic Shares</em></a> in June 2018.</p>
<p data-v-da61000a="" data-v-294dc056="">To date, 20 companies have sought approval to convert their domestic shares into H shares, which would then be eligible to be listed and traded on Hong Kong's stock exchange.</p>
<p data-v-da61000a="" data-v-294dc056="">13 companies have now been given CSRC and Hong Kong listing approval to convert such shares. Only two of those have seen any noticeable movement in the converted shares.</p>
<p data-v-da61000a="" data-v-294dc056="">In the past four months, two companies have <em>withdrawn</em> their application to convert their domestic shares, citing further improvement in the rules and regulations of the domestic capital market, among other factors.  </p>
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<p data-v-da61000a="" data-v-294dc056="">As always, more below the fold. </p>
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This update is the latest in a series dating back to Legend's Conversion of Domestic Shares in June 2018.
To date, 20 companies have sought approval to convert their domestic shares into H shares, which would then be eligible to be listed and traded on Hong Kong's stock exchange.
13 companies have now been given CSRC and Hong Kong listing approval to convert such shares. Only two of those have seen any noticeable movement in the converted shares.
In the past four months, two companies have withdrawn their application to convert their domestic shares, citing further improvement in the rules and regulations of the domestic capital market, among other factors.  


As always, more below the fold. 


Full Circulation Of H-Shares: January 2021 Update

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.

Equity Capital Markets

HBM Holdings Limited / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/harbour-biomed-holdings-limited" target="_blank" data-smartkarma-citation="entities:29717:1" rel="noopener">Harbour Biomed (2142 HK)</a> is a biopharmaceutical company with a focus on discovering, developing and commercialising differentiated antibody therapeutics in immunology and oncology disease areas. Harbour has launched a Hong Kong IPO to raise net proceeds of HK$1,589.5 million ($205 million) at the mid-point of the IPO price range of HK$11.70-12.92 per share.</p></div><div><p>Nine cornerstone investors have agreed to invest about $92 million in the IPO (41.92% of the offer shares at the mid-point of the IPO price range). Cornerstone investors include BlackRock, <a href="https://www.smartkarma.com/entities/hbm-healthcare-investments-ag" target="_blank" data-smartkarma-citation="entities:22373:1" rel="noopener">Hbm Healthcare Investments Ag (HBMN SW)</a>, Hillhouse Capital, Hudson Bay Capital, Octagon Capital, Anlan Fund, <a href="https://www.smartkarma.com/entities/legend-holdings-corp-h" target="_blank" data-smartkarma-citation="entities:517:1" rel="noopener">Legend Holdings Corp H (3396 HK)</a>, OrbiMed and 3W.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/hbm-holdings-harbour-biomed-ipo-initiation-making-resistance-futile" target="_blank" data-smartkarma-citation="insights:45740" rel="noopener">HBM Holdings (Harbour Biomed) IPO Initiation: Making Resistance Futile</a>, we stated that the prospects of Harbour’s core drug assets are favourable. Overall, a strong cornerstone investor lineup and our valuation analysis suggest that the IPO price range is attractive. </p></div></div></div>

Harbour Biomed (2142 HK) is a biopharmaceutical company with a focus on discovering, developing and commercialising differentiated antibody therapeutics in immunology and oncology disease areas. Harbour has launched a Hong Kong IPO to raise net proceeds of HK$1,589.5 million ($205 million) at the mid-point of the IPO price range of HK$11.70-12.92 per share.Nine cornerstone investors have agreed to invest about $92 million in the IPO (41.92% of the offer shares at the mid-point of the IPO price range). Cornerstone investors include BlackRock, Hbm Healthcare Investments Ag (HBMN SW), Hillhouse Capital, Hudson Bay Capital, Octagon Capital, Anlan Fund, Legend Holdings Corp H (3396 HK), OrbiMed and 3W.In HBM Holdings (Harbour Biomed) IPO Initiation: Making Resistance Futile, we stated that the prospects of Harbour’s core drug assets are favourable. Overall, a strong cornerstone investor lineup and our valuation analysis suggest that the IPO price range is attractive. 

HBM Holdings (Harbour Biomed) IPO: Valuation Insights

<p><a href="https://www.smartkarma.com/entities/car-inc" target="_blank" data-smartkarma-citation="entities:942:1" rel="noopener">Car Inc (699 HK)</a> provides car rental services, including car rentals and fleet rentals in China. Late on Friday night, CAR announced a pre-conditional voluntary cash offer from Indigo Glamour, which is wholly-owned by MBK Partners. Indigo Glamour will offer HK$4.00 in cash per share which is a 17.99% premium to the last close price of HK$3.39 per share. The offer is not entirely unexpected as on 20 August, a Reuters article claimed that a consortium led by MBK Partners is seeking to privatise CAR.</p><div class="content-highlight"><p>The pre-conditions which can be waived by the offeror are PRC antitrust approval and necessary consents/waivers from lenders. The key condition precedent is that offeror receives enough acceptances to hold more than 50% of the voting interest. Post-completion of the UCAR share sale and including the irrevocable from <a href="https://www.smartkarma.com/entities/legend-holdings-corp-h" target="_blank" data-smartkarma-citation="entities:517:1" rel="noopener">Legend Holdings Corp H (3396 HK)</a>, the offeror will own 47.41% of the outstanding shares. In combination with a reasonable offer price, we think that offer will garner enough acceptances to comfortably cross the 50% voting interest threshold to become unconditional. </p></div>

Car Inc (699 HK) provides car rental services, including car rentals and fleet rentals in China. Late on Friday night, CAR announced a pre-conditional voluntary cash offer from Indigo Glamour, which is wholly-owned by MBK Partners. Indigo Glamour will offer HK$4.00 in cash per share which is a 17.99% premium to the last close price of HK$3.39 per share. The offer is not entirely unexpected as on 20 August, a Reuters article claimed that a consortium led by MBK Partners is seeking to privatise CAR.The pre-conditions which can be waived by the offeror are PRC antitrust approval and necessary consents/waivers from lenders. The key condition precedent is that offeror receives enough acceptances to hold more than 50% of the voting interest. Post-completion of the UCAR share sale and including the irrevocable from Legend Holdings Corp H (3396 HK), the offeror will own 47.41% of the outstanding shares. In combination with a reasonable offer price, we think that offer will garner enough acceptances to comfortably cross the 50% voting interest threshold to become unconditional. 

CAR Inc’s Conditional VGO from MBK Partners

<p><a href="https://www.smartkarma.com/entities/car-inc" target="_blank" data-smartkarma-citation="entities:942:1" rel="noopener">Car Inc (699 HK)</a> provides car rental services, including car rentals and fleet rentals in China. On Thursday, <a href="https://in.reuters.com/article/car-inc-mbk-partners-m-a/exclusive-mbk-partners-leads-group-in-talks-to-take-hk-listed-car-inc-private-sources-idINKBN25G0KY" target="_blank" rel="noopener">a Reuters article</a> claimed that a consortium led by MBK Partners is seeking to privatise CAR at more than HK$3.10 per share. The consortium which includes Boyu Capital is said to be in talks with Beijing Automotive Group (BAIC Group). The rumoured low-end privatisation price of HK$3.10 per share is in line with the price paid by Jinggangshan BAIC (40% owned by BAIC Group) to recently acquire CAR shares from UCAR and Amber Green (pending approval). </p><div class="content-highlight"><p>At the last close price of HK$2.60 per share, the gross spread to the rumoured low-end privatisation price of HK$3.10 per share is 19%. We think there is a good chance that a privatisation bid materialises but in the event of no-bid, the downside risk is low. </p></div>

Car Inc (699 HK) provides car rental services, including car rentals and fleet rentals in China. On Thursday, a Reuters article claimed that a consortium led by MBK Partners is seeking to privatise CAR at more than HK$3.10 per share. The consortium which includes Boyu Capital is said to be in talks with Beijing Automotive Group (BAIC Group). The rumoured low-end privatisation price of HK$3.10 per share is in line with the price paid by Jinggangshan BAIC (40% owned by BAIC Group) to recently acquire CAR shares from UCAR and Amber Green (pending approval). At the last close price of HK$2.60 per share, the gross spread to the rumoured low-end privatisation price of HK$3.10 per share is 19%. We think there is a good chance that a privatisation bid materialises but in the event of no-bid, the downside risk is low. 

<div>
<p data-v-da61000a="" data-v-294dc056="">This update is the latest in a series dating back to <em><a href="https://skr.ma/c7hcH" target="_blank" rel="noopener">Legend's Conversion of Domestic Shares</a></em> in June 2018, with the most recent addition <em><a href="https://skr.ma/kJWeU" target="_blank" rel="noopener">CPPCC And Full Circulation Of H-Shares</a></em> speculating the 2020 National People's Congress and Chinese People's Political Consultative may provide guidance on the "<em>full circulation of H shares</em>", which would allow the conversion of domestic shares into H shares, which would then be eligible to be listed and traded on Hong Kong's stock exchange.</p>
<p data-v-da61000a="" data-v-294dc056="">Since that insight, another 6 companies have been given the green light to convert and/or have submitted applications to covert.</p>
<p data-v-da61000a="" data-v-294dc056="">There has also been one noticeable movement in one of the initial pilot companies to have converted domestic shares.</p>
<p data-v-da61000a="" data-v-294dc056="">As always, more below the fold. </p>
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This update is the latest in a series dating back to Legend's Conversion of Domestic Shares in June 2018, with the most recent addition CPPCC And Full Circulation Of H-Shares speculating the 2020 National People's Congress and Chinese People's Political Consultative may provide guidance on the "full circulation of H shares", which would allow the conversion of domestic shares into H shares, which would then be eligible to be listed and traded on Hong Kong's stock exchange.
Since that insight, another 6 companies have been given the green light to convert and/or have submitted applications to covert.
There has also been one noticeable movement in one of the initial pilot companies to have converted domestic shares.
As always, more below the fold. 






Full Circulation Of H-Shares - July Update

China

Legend Holdings Corporation, through its subsidiaries, operates in information technology, real estate, financial services, agriculture and food, modern service, and chemical and energy materials sectors in China and internationally.

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Legend Holdings Corp H (3396 HK)

Full Circulation Of H-Shares: January 2021 Update

To date, 20 companies have sought approval to convert their domestic shares into H shares, 13 of which have now been given CSRC and Hong Kong...

David Blennerhassett

HBM Holdings (Harbour Biomed) IPO: Valuation Insights

Harbour has launched an HK IPO to raise net proceeds of $205 million at the mid-point of the price range. Overall, strong cornerstones and our...

Arun George

CAR Inc’s Conditional VGO from MBK Partners

CAR announced a pre-conditional voluntary cash offer at HK$4.00 in cash per share. Overall, we think that offer will garner enough acceptances to...

Arun George

CAR Inc in a Privatisation Play?

Car Inc (699 HK) provides car rental services, including car rentals and fleet rentals in China. On Thursday, a Reuters article claimed that a...

Arun George

Full Circulation Of H-Shares - July Update

This update is the latest in a series dating back to Legend's Conversion of Domestic Shares in June 2018, with the most recent addition CPPCC And...

David Blennerhassett

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52-week Range

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