Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

Nomura Research Institute / Equity Bottom-Up

On 21 June 2021, <a href="https://www.smartkarma.com/entities/nomura-research-institute-ltd" target="_blank" data-smartkarma-citation="entities:18129:1" rel="noopener">Nomura Research Institute Ltd (4307 JP)</a> announced (<a href="https://ir.nri.com/jp/ir/news/auto_20210621452515/pdfFile.pdf" target="_blank" rel="noopener">link</a>) a buyback program of up to 20,000,000 shares (3.30% of shares out) spending up to ¥60 billion, with the program running from 22 June 2021 to 30 December 2021, with possible buying on market and on ToSTNeT-3, but excluding dates in the 10 days around the day after the quarterly results announcements. The company ALSO announced a ToSTNeT-3 buyback tomorrow morning for up to 16,925,200 shares at today's closing price of ¥3,545/share. That 16.925mm shares at that price = ¥59,999,834,000 so one can assume that if the ToSTNeT-3 buyback is completed to the full extent, that will mean the buyback program will be done tomorrow before the market opens.The announcement suggested that <a href="https://www.smartkarma.com/entities/nomura-holdings-inc" target="_blank" data-smartkarma-citation="entities:742:1" rel="noopener">Nomura Holdings (8604 JP)</a> intended to sell as many as 14.105 million shares in the buyback leaving 2.815mm shares for other holders if they want to sell Monday's close. But I remind readers that a) short selling is allowed, and b) it is entirely pro rata (with some niggling little procedural exceptions) so if people stepped in to sell, they would probably get a decent portion of their offer sold at that price. More below the fold.

On 21 June 2021, Nomura Research Institute Ltd (4307 JP) announced (link) a buyback program of up to 20,000,000 shares (3.30% of shares out) spending up to ¥60 billion, with the program running from 22 June 2021 to 30 December 2021, with possible buying on market and on ToSTNeT-3, but excluding dates in the 10 days around the day after the quarterly results announcements. The company ALSO announced a ToSTNeT-3 buyback tomorrow morning for up to 16,925,200 shares at today's closing price of ¥3,545/share. That 16.925mm shares at that price = ¥59,999,834,000 so one can assume that if the ToSTNeT-3 buyback is completed to the full extent, that will mean the buyback program will be done tomorrow before the market opens.The announcement suggested that Nomura Holdings (8604 JP) intended to sell as many as 14.105 million shares in the buyback leaving 2.815mm shares for other holders if they want to sell Monday's close. But I remind readers that a) short selling is allowed, and b) it is entirely pro rata (with some niggling little procedural exceptions) so if people stepped in to sell, they would probably get a decent portion of their offer sold at that price. More below the fold. 

Nomura Research Institute ToSTNeT-3 Buyback

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<div>The <a href="https://www.smartkarma.com/entities/s-p-bse-sensex-index" target="_blank" data-smartkarma-citation="entities:31494:1" rel="noopener">S&amp;P BSE SENSEX Index (SENSEX INDEX)</a> is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 18 June.</div><div>
The June review uses the market cap and turnover data from 1 November to 30 April to determine the stocks to be included and excluded from the index, and the announcement of the changes is made 4 weeks before the rebalance effective date.
We see <a href="https://www.smartkarma.com/entities/oil-natural-gas-corp-ltd" target="_blank" data-smartkarma-citation="entities:3456:1" rel="noopener">Oil &amp; Natural Gas Corp (ONGC IN)</a> as a high probability deletion, while <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a> holds the edge over <a href="https://www.smartkarma.com/entities/tata-steel-ltd" target="_blank" data-smartkarma-citation="entities:20934:1" rel="noopener">Tata Steel Ltd (TATA IN)</a> as an index inclusion.
There will be between 3-6 days of average delivery volume to trade from passive funds on the stocks that are included into and deleted from the index.
</div>

The S&amp;P BSE SENSEX Index (SENSEX INDEX) is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 18 June.
The June review uses the market cap and turnover data from 1 November to 30 April to determine the stocks to be included and excluded from the index, and the announcement of the changes is made 4 weeks before the rebalance effective date.
We see Oil &amp; Natural Gas Corp (ONGC IN) as a high probability deletion, while Wipro Ltd (WPRO IN) holds the edge over Tata Steel Ltd (TATA IN) as an index inclusion.
There will be between 3-6 days of average delivery volume to trade from passive funds on the stocks that are included into and deleted from the index.


Sensex June21 Index Rebalance Preview: Index Committee Has a Decision to Make

In 2016, a Blackstone fund purchased 60.5% of India-based IT Solutions Provider <a href="https://www.smartkarma.com/entities/mphasis-ltd" target="_blank" data-smartkarma-citation="entities:7672:1" rel="noopener">Mphasis Ltd (MPHL IN)</a> from Hewlett Packard (which had been looking to sell its stake for quite a while after having purchased it in 2008 when it bought out EDS) at Rs 430/share, then conducted an Open Offer to buy more shares at Rs 457 and change. The deal was to purchase 106.2mm shares from the sellers and another 26% or 54.93mm shares via an Open Offer, and if no shares were acquired in the Open Offer, the Blackstone fund would buy the other 20.9mm shares from the HPE entity selling and HPE would own no more shares. 
When the deal was announced, the price was just below Rs 500/share and during the course of the summer the price rose further so that the Open Offer at the time obtained only 0.001% of shares out. 
The shares rose, doubling reasonably quickly as Blackstone quickly revamped operations. Over the years, Blackstone opportunistically bought and sold small slices of the company in market operations. Late last year, it became clear that Blackstone was weighing the possibility of selling its 56.16% stake in the company as the valuation had run and shares were three times where they were when they bought. There were suggestions it might also be related to the possible departure of Blackstone India senior managing director Amit Jain who was rumored to be quitting to take up the co-head spot at Carlyle India. By January, seller due diligence had been conducted, banks were engaged, and Blackstone was en route to selling its stake (and the Buyer would be liable to launch an Open Offer) in its largest India investment to date to one of the four PE houses which were expected to put in bids - Brookfield, Bain, Carlyle, and Permira. 
Final round bids were due 24 February and by early March, the sale had been called off as the prospective lead buyer Carlyle and Blackstone as seller couldn't come to terms.
Today, we have a deal. But it's not Carlyle.
Blackstone is selling to Blackstone.

In 2016, a Blackstone fund purchased 60.5% of India-based IT Solutions Provider Mphasis Ltd (MPHL IN) from Hewlett Packard (which had been looking to sell its stake for quite a while after having purchased it in 2008 when it bought out EDS) at Rs 430/share, then conducted an Open Offer to buy more shares at Rs 457 and change. The deal was to purchase 106.2mm shares from the sellers and another 26% or 54.93mm shares via an Open Offer, and if no shares were acquired in the Open Offer, the Blackstone fund would buy the other 20.9mm shares from the HPE entity selling and HPE would own no more shares. 
When the deal was announced, the price was just below Rs 500/share and during the course of the summer the price rose further so that the Open Offer at the time obtained only 0.001% of shares out. 
The shares rose, doubling reasonably quickly as Blackstone quickly revamped operations. Over the years, Blackstone opportunistically bought and sold small slices of the company in market operations. Late last year, it became clear that Blackstone was weighing the possibility of selling its 56.16% stake in the company as the valuation had run and shares were three times where they were when they bought. There were suggestions it might also be related to the possible departure of Blackstone India senior managing director Amit Jain who was rumored to be quitting to take up the co-head spot at Carlyle India. By January, seller due diligence had been conducted, banks were engaged, and Blackstone was en route to selling its stake (and the Buyer would be liable to launch an Open Offer) in its largest India investment to date to one of the four PE houses which were expected to put in bids - Brookfield, Bain, Carlyle, and Permira. 
Final round bids were due 24 February and by early March, the sale had been called off as the prospective lead buyer Carlyle and Blackstone as seller couldn't come to terms.
Today, we have a deal. But it's not Carlyle.
Blackstone is selling to Blackstone. 

Blackstone Sells Mphasis Stake To.... Blackstone and Investors Get a CHEAP Option

The <a href="https://www.smartkarma.com/entities/s-p-bse-sensex-index" target="_blank" data-smartkarma-citation="entities:31494:1" rel="noopener">S&amp;P BSE SENSEX Index (SENSEX INDEX)</a> is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 18 June.The June review uses the market cap and turnover data from 1 November to 30 April to determine the stocks to be included and excluded from the index, and the announcement of the changes is done 4 weeks before the rebalance effective date.At the current time, we see <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a> being included in the index and <a href="https://www.smartkarma.com/entities/oil-natural-gas-corp-ltd" target="_blank" data-smartkarma-citation="entities:3456:1" rel="noopener">Oil &amp; Natural Gas Corp (ONGC IN)</a> being deleted.<a href="https://www.smartkarma.com/entities/tata-steel-ltd" target="_blank" data-smartkarma-citation="entities:20934:1" rel="noopener">Tata Steel Ltd (TATA IN)</a> could be included in the index at the expense of <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a> if it jumps one rank - it has around two and a half months to do that, though each passing day will require a bigger outperformance to make that possible.

The S&amp;P BSE SENSEX Index (SENSEX INDEX) is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 18 June.The June review uses the market cap and turnover data from 1 November to 30 April to determine the stocks to be included and excluded from the index, and the announcement of the changes is done 4 weeks before the rebalance effective date.At the current time, we see Wipro Ltd (WPRO IN) being included in the index and Oil &amp; Natural Gas Corp (ONGC IN) being deleted.Tata Steel Ltd (TATA IN) could be included in the index at the expense of Wipro Ltd (WPRO IN) if it jumps one rank - it has around two and a half months to do that, though each passing day will require a bigger outperformance to make that possible.

Sensex June21 Index Rebalance Preview: Deletion Almost Certain; Addition a Wild Card for Now

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

<a href="https://www.smartkarma.com/entities/mahindra-mahindra-ltd" target="_blank" data-smartkarma-citation="entities:16441:1" rel="noopener">Mahindra &amp; Mahindra (MM IN)</a> reported its Q3FY21 earnings yesterday. It reported strong results in its core farm equipment and automotive segments. M&amp;M also announced progress around its capital allocation assessment, with most of the restructuring and reorganizing coming to an end. It has been also able to turnaround its international auto and farm equipment businesses and by FY22, these businesses are projected to curtail their losses significantly. With investment in Ssangyong written down and its operations discontinued going forward, it will no longer be consolidated and further losses from it are unlikely.
Rural demand remains upbeat suggesting that M&amp;M's earnings has potential to remain on an upward trajectory, led by growth levers across its core segments - Tractors, Farm Machinery and SUVs.

Mahindra &amp; Mahindra (MM IN) reported its Q3FY21 earnings yesterday. It reported strong results in its core farm equipment and automotive segments. M&amp;M also announced progress around its capital allocation assessment, with most of the restructuring and reorganizing coming to an end. It has been also able to turnaround its international auto and farm equipment businesses and by FY22, these businesses are projected to curtail their losses significantly. With investment in Ssangyong written down and its operations discontinued going forward, it will no longer be consolidated and further losses from it are unlikely.
Rural demand remains upbeat suggesting that M&amp;M's earnings has potential to remain on an upward trajectory, led by growth levers across its core segments - Tractors, Farm Machinery and SUVs.

M&M: Q3FY21 Earnings Update - Capital Allocation Assessment and Restructuring Almost Complete

India

Tech Mahindra Ltd. develops and markets computer software.  The Company markets software for telecommunications equipment manufacturers, telecom service providers, software vendors, and systems integrators.

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Tech Mahindra (TECHM IN)

Nomura Research Institute ToSTNeT-3 Buyback

NRI is one of the higher-multiple (forward consensus EV/EBIT or EV/EBITDA) Japanese IT service companies. There is a PRE-OPEN ToSTNeT-3 buyback...

Travis Lundy

Sensex June21 Index Rebalance Preview: Index Committee Has a Decision to Make

ONGC is a high probability deletion from the Sensex at the June review. The index committee needs to decide whether to include Wipro or Tata Steel....

Brian Freitas

Blackstone Sells Mphasis Stake To.... Blackstone and Investors Get a CHEAP Option

Blackstone is selling its large stake in Mphasis purchased in 2016 to another Blackstone consortium. Price is 3% below here. There may be a 2% div...

Travis Lundy

Sensex June21 Index Rebalance Preview: Deletion Almost Certain; Addition a Wild Card for Now

ONGC is an almost certain deletion at the Sensex review in June. The inclusion at the current time is Wipro, but Tata Steel could be included if it...

Brian Freitas

M&M: Q3FY21 Earnings Update - Capital Allocation Assessment and Restructuring Almost Complete

With capital allocation rejig and restructuring completed for the most part, M&M has bootstrapped itself to become more agile and leaner to support...

Ankit Agrawal, CFA

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Nomura Research Institute ToSTNeT-3 Buyback

NRI is one of the higher-multiple (forward consensus EV/EBIT or EV/EBITDA) Japanese IT service companies. There is a *PRE-OPEN* ToSTNeT-3 buyback...

Travis Lundy

Sensex June21 Index Rebalance Preview: Index Committee Has a Decision to Make

ONGC is a high probability deletion from the Sensex at the June review. The index committee needs to decide whether to include Wipro or Tata Steel....

Brian Freitas

Blackstone Sells Mphasis Stake To.... Blackstone and Investors Get a CHEAP Option

Blackstone is selling its large stake in Mphasis purchased in 2016 to another Blackstone consortium. Price is 3% below here. There may be a 2% div...

Travis Lundy

Sensex June21 Index Rebalance Preview: Deletion Almost Certain; Addition a Wild Card for Now

ONGC is an almost certain deletion at the Sensex review in June. The inclusion at the current time is Wipro, but Tata Steel could be included if it...

Brian Freitas

M&M: Q3FY21 Earnings Update - Capital Allocation Assessment and Restructuring Almost Complete

With capital allocation rejig and restructuring completed for the most part, M&M has bootstrapped itself to become more agile and leaner to support...

Ankit Agrawal, CFA

NRI is one of the higher-multiple (forward consensus EV/EBIT or EV/EBITDA) Japanese IT service companies. There is a PRE-OPEN ToSTNeT-3 buyback...