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

<ul>
<li>The consortium’s updated transaction has lowered the offer price -27.6% to $57.25 in cash per ADS, a 24.92% premium to the last trading price (11 January 2022).</li>
<li>The combination of the dramatically lower price, spurious justification for lowering the price and the shares recently trading higher than the revised price is unlikely to win over minorities.</li>
<li>Meeting the two-thirds shareholder approval threshold is likely a challenge due to the need to convince around 27% of disinterested shareholders to vote in favour of the transaction. </li>
</ul>


The consortium’s updated transaction has lowered the offer price -27.6% to $57.25 in cash per ADS, a 24.92% premium to the last trading price (11 January 2022).
The combination of the dramatically lower price, spurious justification for lowering the price and the shares recently trading higher than the revised price is unlikely to win over minorities.
Meeting the two-thirds shareholder approval threshold is likely a challenge due to the need to convince around 27% of disinterested shareholders to vote in favour of the transaction. 


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

LG Energy Solution / Equity Capital Markets

<ul>
<li>2021 marked our sixth year covering Equity Capital Markets (ECM) in Asia Pacific. </li>
<li>Most markets were in top gear on the ECM front and we ended the year covering the highest number of IPOs and the second highest number of placements since inception.</li>
<li>For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.</li>
</ul>


2021 marked our sixth year covering Equity Capital Markets (ECM) in Asia Pacific. 
Most markets were in top gear on the ECM front and we ended the year covering the highest number of IPOs and the second highest number of placements since inception.
For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.


Aequitas 2021 IPOs and Placements Performance Review - Busiest Year on Record

Full Truck Alliance   / Equity Capital Markets

<ul>
<li>Full Truck Alliance (FTA), China’s largest digital freight platform by gross transaction value, raised around US$2bn in its US listing in Jun 21. It is backed by Softbank and Sequoia.</li>
<li>We have looked at various aspects of the deal in our earlier IPO notes, links to which are included below.</li>
<li>In this note, we look at the updates since listing and the impact of the upcoming lock-up expiry.</li>
</ul>


Full Truck Alliance (FTA), China’s largest digital freight platform by gross transaction value, raised around US$2bn in its US listing in Jun 21. It is backed by Softbank and Sequoia.
We have looked at various aspects of the deal in our earlier IPO notes, links to which are included below.
In this note, we look at the updates since listing and the impact of the upcoming lock-up expiry.


Full Truck Alliance Lock-Up Expiry - In Similar Delisting Boat as Didi. 60% of Stock up for Lock-Up

<ul>
<li>Kanzhun, an online recruitment platform in China, raised around US$1bn in its US IPO in Jun 2021.</li>
<li>The company is backed by Tencent and pre-IPO financial investors own over 50% of the company.</li>
<li>In this note, we look at the updates since listing and the impact of the upcoming lock-up expiry.</li>
</ul>


Kanzhun, an online recruitment platform in China, raised around US$1bn in its US IPO in Jun 2021.
The company is backed by Tencent and pre-IPO financial investors own over 50% of the company.
In this note, we look at the updates since listing and the impact of the upcoming lock-up expiry.


Kanzhun Lock-Up - Has Held up Remarkably Well with All Pre-IPO Shareholders Well in the Money

As a reminder, <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc Adr (JOBS US)</a> entered into a definitive agreement for a privatisation transaction at $79.05 in cash per ADS on 21 June. The consortium consists of DCP, Ocean Link Partners, <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> and Mr Rick Yan, the CEO since 2000. The merger was expected to close during the second half of 2021. The merger required shareholders representing two-thirds of shares present and voting to approve the deal. However, since the announcement of the definitive agreement, the gross spread reached a high of 33% on 29 October largely due to the radio silence on the deal completion. In the current uncertain Chinese regulatory climate, 51job did little to soothe investors’ nerves by failing to even mention the privatisation deal in its 2Q21 results released on 24 September.Encouragingly, the shares climbed 10% on 2 November due to the release of a Schedule 13D filing on 1 November which highlighted the consortium’s acquisition facilities agreement of $1.8 billion entered on 21 October and Mr Rick Yan’s facility agreement of $450 million entered on 28 October, both with China Merchants Bank. We think that the signing of the acquisition facilities is a significant step towards deal completion. While the privatisation price is not a knockout bid and is a modest premium to historical VWAPs over a 3-years and 1-year time period, the offer is reasonable in the context of 51job’s forecasted growth (PEG basis). Nevertheless, for shareholders seeking to be paid the fair value of their shares, dissenter rights are available.  <div class="content-highlight">The announcement on 21 June stated that Mr Rick, Recruit and certain other existing shareholders have agreed to vote their shares, which represent 54.9% of the voting rights, in favour of the privatisation deal. We continue to think that this level of support should be enough to get past the two-thirds shareholder approval threshold. The gross spread to the offer price is 17.3% at the last close price of $67.40 per ADS. </div>

As a reminder, 51 Job Inc Adr (JOBS US) entered into a definitive agreement for a privatisation transaction at $79.05 in cash per ADS on 21 June. The consortium consists of DCP, Ocean Link Partners, Recruit Holdings (6098 JP) and Mr Rick Yan, the CEO since 2000. The merger was expected to close during the second half of 2021. The merger required shareholders representing two-thirds of shares present and voting to approve the deal. However, since the announcement of the definitive agreement, the gross spread reached a high of 33% on 29 October largely due to the radio silence on the deal completion. In the current uncertain Chinese regulatory climate, 51job did little to soothe investors’ nerves by failing to even mention the privatisation deal in its 2Q21 results released on 24 September.Encouragingly, the shares climbed 10% on 2 November due to the release of a Schedule 13D filing on 1 November which highlighted the consortium’s acquisition facilities agreement of $1.8 billion entered on 21 October and Mr Rick Yan’s facility agreement of $450 million entered on 28 October, both with China Merchants Bank. We think that the signing of the acquisition facilities is a significant step towards deal completion. While the privatisation price is not a knockout bid and is a modest premium to historical VWAPs over a 3-years and 1-year time period, the offer is reasonable in the context of 51job’s forecasted growth (PEG basis). Nevertheless, for shareholders seeking to be paid the fair value of their shares, dissenter rights are available.  The announcement on 21 June stated that Mr Rick, Recruit and certain other existing shareholders have agreed to vote their shares, which represent 54.9% of the voting rights, in favour of the privatisation deal. We continue to think that this level of support should be enough to get past the two-thirds shareholder approval threshold. The gross spread to the offer price is 17.3% at the last close price of $67.40 per ADS. 

51job’s Privatisation Spread Risk/Reward

China

Kanzhun Limited provides online recruitment services. The Company connects job seekers and enterprise users through its mobile application. Kanzhun offers a mobile-native product that promotes instant direct chats between enterprise users and job seekers.

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Kanzhun (BZ US)

51job’s Lowered Privatisation Bid

The consortium has lowered the offer price -27.6% to $57.25 in cash per ADS. Meeting the 2/3rd approval threshold is likely a challenge as it...

Arun George

Aequitas 2021 IPOs and Placements Performance Review - Busiest Year on Record

2021 marked our sixth year of Asia ECM coverage. Most markets were in top gear on the ECM front and we ended the year covering the highest number...

Sumeet Singh

Full Truck Alliance Lock-Up Expiry - In Similar Delisting Boat as Didi. 60% of Stock up for Lock-Up

Full Truck Alliance (FTA), China’s largest digital freight platform by gross transaction value, raised around US$2bn in its US listing in Jun 21....

Sumeet Singh

Kanzhun Lock-Up - Has Held up Remarkably Well with All Pre-IPO Shareholders Well in the Money

Kanzhun, an online recruitment platform in China, raised around US$1bn in its US IPO in Jun 2021. In this note, we will talk about the upcoming...

Sumeet Singh

51job’s Privatisation Spread Risk/Reward

We think that the signing of the acquisition facilities is a significant step towards deal completion. The gross spread to the offer price is 17.3%...

Arun George

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