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

<p><a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934:1" rel="noopener">ESR-REIT (EREIT SP)</a> announced the proposed merger with <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> by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). </p><p>The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by <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> for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.</p><p>A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). </p><div class="content-highlight"><p>As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.</p></div>

ESR-REIT (EREIT SP) announced the proposed merger with ARA LOGOS (ALLT SP) by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by ESR Cayman (1821 HK) for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.

ESR-REIT’s Proposed Merger with ARA LOGOS

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<section>
<div id="ember10949">
<div id="ember10950">
<div>
<p><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) have <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.</p>
<p>ALOG unitholders will receive an indicative Scheme Consideration of S$0.95/ALOG unit,  comprising S$0.095 in cash and 1.6765 new ESR-Reit units, to be issued at S$0.51/unit. However, if using ESR's last closing price, the implied Offer is $0.8746/unit, or a 6.46% discount last close. </p>
</div>
<div>
<p>That discount to the undisturbed is less than inspiring. However, the indicative Offer Price is a six-year high, you're receiving 90% of the consideration in scrip, and the exchange ratio is in line with the 12-month average. That's probably enough to get it over the line </p>
</div>
<div>
<p>More below the fold.</p>
</div>
<div></div>
</div>
</div>
</section>
<section>
<p></p>
</section>





ESR-REIT (EREIT SP) and ARA LOGOS (ALLT SP) (ALOG) have 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.
ALOG unitholders will receive an indicative Scheme Consideration of S$0.95/ALOG unit,  comprising S$0.095 in cash and 1.6765 new ESR-Reit units, to be issued at S$0.51/unit. However, if using ESR's last closing price, the implied Offer is $0.8746/unit, or a 6.46% discount last close. 


That discount to the undisturbed is less than inspiring. However, the indicative Offer Price is a six-year high, you're receiving 90% of the consideration in scrip, and the exchange ratio is in line with the 12-month average. That's probably enough to get it over the line 


More below the fold.









ARA Logos (ALLT SP) To Merge with ESR-REIT (EREIT SP)

China Logistics Property Holdings / Event-Driven

<p><a href="https://www.smartkarma.com/entities/china-logistics-property-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:22799:1" rel="noopener">China Logistics Property Holdings (1589 HK)</a>/CNLP is a leading provider of premium logistics facilities in China. As of 30 June 2021, CNLP had 179 logistics facilities in operation in 38 logistics parks located in logistics hubs in 19 provinces or centrally administered municipalities. </p><p>As discussed in <a href="https://www.smartkarma.com/insights/china-logistics-property-s-potential-mgo-from-jd-com" target="_blank" data-smartkarma-citation="insights:56740" rel="noopener">China Logistics Property’s Potential MGO from JD.com</a>, CNLP announced on 26 August that Mr Li Shifa, the founder and the Chairman, is in discussions with a potential purchaser to sell his 26.38% stake in CNLP. If the transaction is completed, it may lead to a change in control and a mandatory general offer (MGO) under Rule 26.1 of the Takeovers Code. The announcement was in response to a Bloomberg article that claimed that <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> is in discussions to purchase Mr Li Shifa along with RRJ Capital’s stake in CNLP at a valuation of about $2 billion (implies a price of HK$4.48 per share). </p><p>Today, CNLP announced that Mr Li Shifa entered into a sale and purchase agreement with JD Property Group Corporation (owned 83.89% by JD.com) to sell his 26.38% stake in CNLP. The purchase price is HK$4.35 per sale share, a 17.25% premium to the unaffected share price of HK$3.71 (25 August). </p><p>The completion of the sale and purchase agreement will result in the offeror owning 37.02% of the outstanding shares, which will trigger a mandatory share offer under Rule 26.1 of the Takeovers Code. The sale and purchase agreement is subject to various conditions including regulatory approval (AML authority). Regulatory approval which is expected within six months should be forthcoming as the transaction is unlikely to raise market concentration issues.</p><div class="content-highlight"><p>The mandatory share offer is conditional on the offeror and parties acting in concert with it holding more than 50% of the voting rights. The offeror has received irrevocables which represent 29.38% of the outstanding shares. Consequently, the 50%+ voting threshold will be satisfied due to the irrevocables. At the last close price of HK$4.05, the gross spread to the MGO price of HK$4.35 per is 7.4%. </p></div>

China Logistics Property Holdings (1589 HK)/CNLP is a leading provider of premium logistics facilities in China. As of 30 June 2021, CNLP had 179 logistics facilities in operation in 38 logistics parks located in logistics hubs in 19 provinces or centrally administered municipalities. As discussed in China Logistics Property’s Potential MGO from JD.com, CNLP announced on 26 August that Mr Li Shifa, the founder and the Chairman, is in discussions with a potential purchaser to sell his 26.38% stake in CNLP. If the transaction is completed, it may lead to a change in control and a mandatory general offer (MGO) under Rule 26.1 of the Takeovers Code. The announcement was in response to a Bloomberg article that claimed that JD.com Inc (ADR) (JD US) is in discussions to purchase Mr Li Shifa along with RRJ Capital’s stake in CNLP at a valuation of about $2 billion (implies a price of HK$4.48 per share). Today, CNLP announced that Mr Li Shifa entered into a sale and purchase agreement with JD Property Group Corporation (owned 83.89% by JD.com) to sell his 26.38% stake in CNLP. The purchase price is HK$4.35 per sale share, a 17.25% premium to the unaffected share price of HK$3.71 (25 August). The completion of the sale and purchase agreement will result in the offeror owning 37.02% of the outstanding shares, which will trigger a mandatory share offer under Rule 26.1 of the Takeovers Code. The sale and purchase agreement is subject to various conditions including regulatory approval (AML authority). Regulatory approval which is expected within six months should be forthcoming as the transaction is unlikely to raise market concentration issues.The mandatory share offer is conditional on the offeror and parties acting in concert with it holding more than 50% of the voting rights. The offeror has received irrevocables which represent 29.38% of the outstanding shares. Consequently, the 50%+ voting threshold will be satisfied due to the irrevocables. At the last close price of HK$4.05, the gross spread to the MGO price of HK$4.35 per is 7.4%. 

China Logistics Property’s Mandatory Conditional Offer Set in Motion

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

<p>ANE, an express freight network operator in China for less-than-truckload (LTL) market, aims to raise around US$500m in its Hong Kong IPO. The company is backed by a host of financial investors including Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.</p><p>As per iResearch, ANE’s network was the largest in China in terms of total freight volume over 2017-20 with a market share of 17.2% in 2020.</p><p>By Dec 2020, it had collaborated with approximately 26,400 freight partners and agents to serve 3.6m shippers across approximately 96% of the counties and townships in China. Both the freight partners and freight agents operate under its brand and are required to adhere to its service guidelines and policies.</p><p>ANE’s overall volume and top line growth has been decent. However, not all of its offerings have been growing, while some of its revenue growth was driven by accounting changes. </p><p>Moreover, despite claiming to be the largest player in its segment, it appears to be losing market share and like the rest of the industry, it appears to have little pricing power.</p>

ANE, an express freight network operator in China for less-than-truckload (LTL) market, aims to raise around US$500m in its Hong Kong IPO. The company is backed by a host of financial investors including Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.As per iResearch, ANE’s network was the largest in China in terms of total freight volume over 2017-20 with a market share of 17.2% in 2020.By Dec 2020, it had collaborated with approximately 26,400 freight partners and agents to serve 3.6m shippers across approximately 96% of the counties and townships in China. Both the freight partners and freight agents operate under its brand and are required to adhere to its service guidelines and policies.ANE’s overall volume and top line growth has been decent. However, not all of its offerings have been growing, while some of its revenue growth was driven by accounting changes. Moreover, despite claiming to be the largest player in its segment, it appears to be losing market share and like the rest of the industry, it appears to have little pricing power.

ANE Logistics Pre-IPO - Margins Expanding but Appears to Be Falling Behind

<p><a href="https://www.smartkarma.com/entities/china-logistics-property-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:22799:1" rel="noopener">China Logistics Property Holdings (1589 HK)</a>/CNLP is a leading provider of premium logistics facilities in China. As of 30 June 2021, CNLP had 179 logistics facilities in operation in 38 logistics parks located in logistics hubs in 19 provinces or centrally administered municipalities. </p><p>After market close on Thursday, CNLP announced that Mr Li Shifa, the founder and the Chairman, is in discussions with a potential purchaser to sell his 26.38% stake in CNLP. If the transaction is completed, it may lead to a change in control and a mandatory general offer (MGO) under Rule 26.1 of the Takeovers Code. </p><p>The announcement was in response to a Bloomberg article that claimed that <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> is in discussions to purchase Mr Li Shifa along with RRJ Capital’s stake in CNLP at a valuation of about $2 billion (implies a price of HK$4.48 per share). JD.com is the fourth-largest shareholder and represent 10.11% of the outstanding shares. Speculation on the fate of Mr Li Shifa and RRJ Capital’s stakes have been ongoing for several months. On 29 December 2020, CNLP announced that both Mr Li Shifa and RRJ Capital were conducting a preliminary strategic review of their stakes which could lead to a sale of all or part of the stakes. Press reports at that time suggested that Mr Li Shifa and RRJ Capital were looking for around HK$4.70 per share.</p><p>If JD.com acquires Mr Li Shifa stake it will own 30% or more of the voting rights, which will trigger an MGO under Rule 26.1 of the Takeovers Code. Notably, JD.com is also CNLP’s largest customer accounting for 29.9% of total revenue in 2020.</p><p>CNLP recently raised HK$767 million through a placement which completed on 17 June 2021. Post the placement, the public float of 24.02% was below the minimum level of 25% as prescribed by Rule 8.08(1)(a) of the Listing Rules. CNLP noted that it is in discussions with various substantial shareholders to place down their shares. </p><div class="content-highlight"><p>We think the transaction is sensible for JD.com as it provides a quicker "buy" route than the "build" route to securing premium logistics facilities in China. We think that a deal will be struck as an agreement will be beneficial to both sides. At the last close price of HK$4.22, the gross spread to the potential MGO price of HK$4.48 per share implied by a $2 billion valuation is 6.2%. </p></div>

China Logistics Property Holdings (1589 HK)/CNLP is a leading provider of premium logistics facilities in China. As of 30 June 2021, CNLP had 179 logistics facilities in operation in 38 logistics parks located in logistics hubs in 19 provinces or centrally administered municipalities. After market close on Thursday, CNLP announced that Mr Li Shifa, the founder and the Chairman, is in discussions with a potential purchaser to sell his 26.38% stake in CNLP. If the transaction is completed, it may lead to a change in control and a mandatory general offer (MGO) under Rule 26.1 of the Takeovers Code. The announcement was in response to a Bloomberg article that claimed that JD.com Inc (ADR) (JD US) is in discussions to purchase Mr Li Shifa along with RRJ Capital’s stake in CNLP at a valuation of about $2 billion (implies a price of HK$4.48 per share). JD.com is the fourth-largest shareholder and represent 10.11% of the outstanding shares. Speculation on the fate of Mr Li Shifa and RRJ Capital’s stakes have been ongoing for several months. On 29 December 2020, CNLP announced that both Mr Li Shifa and RRJ Capital were conducting a preliminary strategic review of their stakes which could lead to a sale of all or part of the stakes. Press reports at that time suggested that Mr Li Shifa and RRJ Capital were looking for around HK$4.70 per share.If JD.com acquires Mr Li Shifa stake it will own 30% or more of the voting rights, which will trigger an MGO under Rule 26.1 of the Takeovers Code. Notably, JD.com is also CNLP’s largest customer accounting for 29.9% of total revenue in 2020.CNLP recently raised HK$767 million through a placement which completed on 17 June 2021. Post the placement, the public float of 24.02% was below the minimum level of 25% as prescribed by Rule 8.08(1)(a) of the Listing Rules. CNLP noted that it is in discussions with various substantial shareholders to place down their shares. We think the transaction is sensible for JD.com as it provides a quicker "buy" route than the "build" route to securing premium logistics facilities in China. We think that a deal will be struck as an agreement will be beneficial to both sides. At the last close price of HK$4.22, the gross spread to the potential MGO price of HK$4.48 per share implied by a $2 billion valuation is 6.2%. 

China Logistics Property’s Potential MGO from JD.com

China

ESR Group Limited operates as an integrated logistics real estate platform. The Company provides real estate private equity fund management, real estate investment trust, and other services. ESR Group conducts businesses in China, Japan, South Korea, Australia, Singapore, India, New Zealand, and other countries.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

ESR Group (1821 HK)

ESR-REIT’s Proposed Merger with ARA LOGOS

A key issue is on pricing particularly the EREIT issue price of S$0.510, based on EREIT’s 52-week high. While short-term pricing concerns will...

Arun George

ARA Logos (ALLT SP) To Merge with ESR-REIT (EREIT SP)

On balance, there's probably enough here for the deal to get up. But the recent voting for Soilbuild does lend an element of risk. But at this...

David Blennerhassett

China Logistics Property’s Mandatory Conditional Offer Set in Motion

The MGO will be meet the 50%+ voting threshold due to irrevocables. At the last close price of HK$4.05, the gross spread to the MGO price of...

Arun George

ANE Logistics Pre-IPO - Margins Expanding but Appears to Be Falling Behind

ANE, an express freight network operator in China for less-than-truckload (LTL) market, aims to raise around US$500m in its Hong Kong IPO.

Sumeet Singh

China Logistics Property’s Potential MGO from JD.com

CNLP announced that Mr Li Shifa is in discussions with a purchaser to sell his 26.38% stake, which may trigger an MGO. The gross spread to the...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)