IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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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

China Agri Industries Hldgs / Event-Driven

<p><a href="https://www.smartkarma.com/entities/china-agri-industries-hldgs" target="_blank" data-smartkarma-citation="entities:11088:1" rel="noopener">China Agri Industries Hldgs (606 HK)</a> is one of the largest vegetable oil and oilseed meals producers in China. On 28 November 2019, China Agri disclosed that COFCO had a made a voluntary conditional cash offer to acquire all the issued shares for HK$4.25 cash per share. Predictably, in the scheme document, the independent board committee and the independent financial advisor (IFA) recommended independent shareholders to accept the offer.</p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/china-agri-industries-joins-the-list-of-soe-privatisations" target="_blank" rel="noopener">our previous note</a>, we stated that the offer is attractive with a strong chance to cross the high threshold required for a successful privatisation proposal in Hong Kong. In this note, we provide our thoughts on the IFA’s valuation methodology and the fallout from the covid-19 outbreak. </p></div>

China Agri Industries Hldgs (606 HK) is one of the largest vegetable oil and oilseed meals producers in China. On 28 November 2019, China Agri disclosed that COFCO had a made a voluntary conditional cash offer to acquire all the issued shares for HK$4.25 cash per share. Predictably, in the scheme document, the independent board committee and the independent financial advisor (IFA) recommended independent shareholders to accept the offer.In our previous note, we stated that the offer is attractive with a strong chance to cross the high threshold required for a successful privatisation proposal in Hong Kong. In this note, we provide our thoughts on the IFA’s valuation methodology and the fallout from the covid-19 outbreak. 

China Agri-Industries Privatisation: The Covid-19 Outbreak and IFA Valuation

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

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<p>On the 28 November, state-owned COFCO, and major shareholder, <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1128/2019112800135.pdf" target="_blank" rel="noopener">proposed</a> the privatisation of grain processor and trader <a href="https://www.smartkarma.com/entities/china-agri-industries-hldgs" target="_blank" data-smartkarma-citation="entities:11088:1" rel="noopener">China Agri Industries Hldgs (606 HK)</a> at $4.25/share, a 34.07% premium to last close, by way of a Scheme. The price was final. </p>
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<p>With COFCO, together with concert parties, holding 60.75% of shares out, the blocking vote at the Scheme Meeting was 3.925%. No single shareholder has such a blocking stake. The headcount test does not apply as China Agri is Hong Kong-incorporated.</p>
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<p>The Scheme Document is now <a href="http://img.chinaagri.com/Uploads/Zlyz/File/2020/02/13/u5e45656213fae.pdf" target="_blank" rel="noopener">out</a>. The Court Meeting is scheduled to take place on the 6 March. The IFA considers the Offer to be fair and reasonable. Optically, this opinion was a given.</p>
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<p>This is a pretty clean Scheme. I previously estimated payment the second week of March - however, the indicative payment will now occur on or before the 30 March, after the dispatch of the Scheme Document was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1218/2019121800763.pdf" target="_blank" rel="noopener">delayed</a> until the 14 February from the 18 December. </p>
<p>A further interim dividend of HK$0.04, declared on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0204/2020020401847.pdf" target="_blank" rel="noopener">4 February</a>, will also be added to the Offer Price, after the Offeror "<em>consented to the declaration and payment</em>". The record date for this dividend is the 17 March, the same day as the Scheme Record date. The payment is expected on the 17 April.</p>
<p>Trading at a gross spread of 1.6%, including the dividend, with payment in around 6 weeks, for those investors seeking a quick return.</p>
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On the 28 November, state-owned COFCO, and major shareholder, proposed the privatisation of grain processor and trader China Agri Industries Hldgs (606 HK) at $4.25/share, a 34.07% premium to last close, by way of a Scheme. The price was final. 


With COFCO, together with concert parties, holding 60.75% of shares out, the blocking vote at the Scheme Meeting was 3.925%. No single shareholder has such a blocking stake. The headcount test does not apply as China Agri is Hong Kong-incorporated.


The Scheme Document is now out. The Court Meeting is scheduled to take place on the 6 March. The IFA considers the Offer to be fair and reasonable. Optically, this opinion was a given.


This is a pretty clean Scheme. I previously estimated payment the second week of March - however, the indicative payment will now occur on or before the 30 March, after the dispatch of the Scheme Document was delayed until the 14 February from the 18 December. 
A further interim dividend of HK$0.04, declared on the 4 February, will also be added to the Offer Price, after the Offeror "consented to the declaration and payment". The record date for this dividend is the 17 March, the same day as the Scheme Record date. The payment is expected on the 17 April.
Trading at a gross spread of 1.6%, including the dividend, with payment in around 6 weeks, for those investors seeking a quick return.



Hong Kong

China Starch Holdings Limited manufactures cornstarch. The Company also manufactures L-lysine hydrochloride salt and other ancillary corn-refined and corn-base products such as corn slurry, corn germ, corn fiber, corn glutten meal, and agricultural fertilizers.

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China Starch Holdings (3838 HK)

China Agri-Industries Privatisation: The Covid-19 Outbreak and IFA Valuation

China Agri Industries Hldgs (606 HK) is one of the largest vegetable oil and oilseed meals producers in China. On 28 November 2019, China Agri...

Arun George

China Agri: Done Deal As IFA Signs Off

On the 28 November, state-owned COFCO, and major shareholder, proposed the privatisation of grain processor and trader China Agri Industries Hldgs...

David Blennerhassett

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