Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Yesterday morning, the Nikkei surprised everyone with an <a href="https://asia.nikkei.com/Business/Business-Deals/KDDI-in-talks-for-near-50-stake-in-online-brokerage-Kabu.com" target="_blank">article</a> saying <a href="https://www.smartkarma.com/entities/639" target="_blank" data-smartkarma-citation="entities:639:1">KDDI Corp (9433 JP)</a> was holding negotiations to acquire a stake of up to just under 50% in <a href="https://www.smartkarma.com/entities/17019" target="_blank" data-smartkarma-citation="entities:17019:1">Kabu.Com Securities (8703 JP)</a>, which is the online brokerage entity of <a href="https://www.smartkarma.com/entities/218" target="_blank" data-smartkarma-citation="entities:218:1">Mitsubishi UFJ Financial Group (8306 JP)</a> with 1.1 million customers. Kabu.com shares were bid limit up all day long and closed at ¥462, which is a 10+ year closing high. The idea is not a new one. The mobile telecommunications market in Japan is mature, and one of the few ways Type 1 telecom providers can grow is by adding content through the "pipes." KDDI already has an investment in an online banking 50/50 joint venture with MUFG called Jibun Bank ("My Bank" or "Myself Bank") which it launched in 2008. KDDI <a href="https://www.reuters.com/article/us-kddi-daiwa/japans-kddi-daiwa-sec-tie-up-in-smartphone-asset-management-idUSKBN1FS02K" target="_blank">established</a> a smartphone-based asset management service with <a href="https://www.smartkarma.com/entities/8389" target="_blank" data-smartkarma-citation="entities:8389:1">Daiwa Securities Group (8601 JP)</a> just under a year ago, where KDDI owns 66.6% and Daiwa 33.4%. This was to attract younger customers to savings products accessible through an app in order to make those customers stickier over the long-term. KDDI also bought into <a href="https://www.smartkarma.com/entities/1564" target="_blank" data-smartkarma-citation="entities:1564:1">Lifenet Insurance Co (7157 JP)</a> in 2015 through a capital raise, and is now its largest shareholder at just over 25% (a decent (and recent) presentation of the company is <a href="https://ir.lifenet-seimei.co.jp/en/library/material/main/0/teaserItems1/00/file/lifenet_overview_1812_en_final.pdf" target="_blank">here</a>). About six months ago, KDDI <a href="https://prtimes.jp/main/html/rd/p/000000032.000012138.html" target="_blank">injected ¥6bn</a> (link is Japanese) into Japanese financial services company Finatext to help spark their new service of a ¥0 commission brokerage. I would note that Finatext and partner (now sub) NOWCAST launched an algorithmic personal asset management advisory service using for kabu.com Securities in 2016. Owning a stake in a broker would go a long ways towards providing comprehensive financial services access by smartphone under a KDDI-owned profit umbrella.Is a deal like this feasible? Reasonable? Likely?The two companies' first response was pretty standard. This was the version from KDDI:<ul>
<li>当社は、カブドットコム証券と金融事業においてさまざまな可能性を検討していますが、決まった事柄 はございません. </li>
<li>KDDI is considering various possibilities in financial business with kabu.com Securities, however, there is no determined facts. [a better translation of the Japanese is "however... no decisions have been made"]</li>
</ul>This is pretty standard in Japanese corporate "clarifications." There are, in fact, no 'decisions' unless a board meeting has been convened and put their stamp on it.But the Japanese market will look at a comment like this and figure that where there is smoke there is fire.

Yesterday morning, the Nikkei surprised everyone with an article saying KDDI Corp (9433 JP) was holding negotiations to acquire a stake of up to just under 50% in Kabu.Com Securities (8703 JP), which is the online brokerage entity of Mitsubishi UFJ Financial Group (8306 JP) with 1.1 million customers. Kabu.com shares were bid limit up all day long and closed at ¥462, which is a 10+ year closing high. The idea is not a new one. The mobile telecommunications market in Japan is mature, and one of the few ways Type 1 telecom providers can grow is by adding content through the "pipes." KDDI already has an investment in an online banking 50/50 joint venture with MUFG called Jibun Bank ("My Bank" or "Myself Bank") which it launched in 2008. KDDI established a smartphone-based asset management service with Daiwa Securities Group (8601 JP) just under a year ago, where KDDI owns 66.6% and Daiwa 33.4%. This was to attract younger customers to savings products accessible through an app in order to make those customers stickier over the long-term. KDDI also bought into Lifenet Insurance Co (7157 JP) in 2015 through a capital raise, and is now its largest shareholder at just over 25% (a decent (and recent) presentation of the company is here). About six months ago, KDDI injected ¥6bn (link is Japanese) into Japanese financial services company Finatext to help spark their new service of a ¥0 commission brokerage. I would note that Finatext and partner (now sub) NOWCAST launched an algorithmic personal asset management advisory service using for kabu.com Securities in 2016. Owning a stake in a broker would go a long ways towards providing comprehensive financial services access by smartphone under a KDDI-owned profit umbrella.Is a deal like this feasible? Reasonable? Likely?The two companies' first response was pretty standard. This was the version from KDDI:
当社は、カブドットコム証券と金融事業においてさまざまな可能性を検討していますが、決まった事柄 はございません. 
KDDI is considering various possibilities in financial business with kabu.com Securities, however, there is no determined facts. [a better translation of the Japanese is "however... no decisions have been made"]
This is pretty standard in Japanese corporate "clarifications." There are, in fact, no 'decisions' unless a board meeting has been convened and put their stamp on it.But the Japanese market will look at a comment like this and figure that where there is smoke there is fire.

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

SBI Insurance Group / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/27442" target="_blank" data-smartkarma-citation="entities:27442:1">SBI Insurance Group Co Ltd (7326 JP)</a> is the insurance arm of <a href="https://www.smartkarma.com/entities/10928" target="_blank" data-smartkarma-citation="entities:10928:1">Sbi Holdings (8473 JP)</a>, catering to the non-life, life and small amount short-term insurance sectors in a diversified manner. The company emphasises direct distribution through the internet to reduce costs and the use of technology to adapt products to maximise fit with consumer needs. In addition, the company aims to leverage the network of SBI Holdings which will continue to own about 82% of the company after listing.<table class="table table-striped"><tbody>
<tr>
<td>Company Name</td>
<td>SBI Insurance Group Co. Ltd.</td>
</tr>
<tr>
<td>Company Ticker</td>
<td>7326 JP</td>
</tr>
<tr>
<td>Stock Exchange</td>
<td>TSE Mothers Section</td>
</tr>
<tr>
<td>Business Description</td>
<td>Diversified Internet Based Insurance</td>
</tr>
<tr>
<td></td>
<td></td>
</tr>
<tr>
<td>New Shares Offered</td>
<td>4,000,000</td>
</tr>
<tr>
<td>Existing Shares Offered</td>
<td>856,500</td>
</tr>
<tr>
<td>Overallotment (Existing Shares)</td>
<td>1,710,000</td>
</tr>
<tr>
<td>Total Shares Offered</td>
<td>6,566,500</td>
</tr>
<tr>
<td>Tentative Price</td>
<td>1,800-2,160</td>
</tr>
<tr>
<td>Estimated Capital to be Raised (JPY)</td>
<td>7,920,000,000</td>
</tr>
<tr>
<td></td>
<td></td>
</tr>
<tr>
<td>Bookbuilding</td>
<td>07 Sep - 13 Sep</td>
</tr>
<tr>
<td>Pricing Date</td>
<td>14 Sep</td>
</tr>
<tr>
<td>Application Dates</td>
<td>24th May - 29th May</td>
</tr>
<tr>
<td>Listing Date</td>
<td>27 Sep</td>
</tr>
<tr>
<td></td>
<td></td>
</tr>
<tr>
<td>Shares Outstanding at Listing</td>
<td>22,820,530</td>
</tr>
<tr>
<td>Estimated Market Capitalisation (JPY)</td>
<td>45,184,649,400</td>
</tr>
</tbody></table>

SBI Insurance Group Co Ltd (7326 JP) is the insurance arm of Sbi Holdings (8473 JP), catering to the non-life, life and small amount short-term insurance sectors in a diversified manner. The company emphasises direct distribution through the internet to reduce costs and the use of technology to adapt products to maximise fit with consumer needs. In addition, the company aims to leverage the network of SBI Holdings which will continue to own about 82% of the company after listing.

Company Name
SBI Insurance Group Co. Ltd.


Company Ticker
7326 JP


Stock Exchange
TSE Mothers Section


Business Description
Diversified Internet Based Insurance






New Shares Offered
4,000,000


Existing Shares Offered
856,500


Overallotment (Existing Shares)
1,710,000


Total Shares Offered
6,566,500


Tentative Price
1,800-2,160


Estimated Capital to be Raised (JPY)
7,920,000,000






Bookbuilding
07 Sep - 13 Sep


Pricing Date
14 Sep


Application Dates
24th May - 29th May


Listing Date
27 Sep






Shares Outstanding at Listing
22,820,530


Estimated Market Capitalisation (JPY)
45,184,649,400



SBI Insurance Group IPO: Riding Pets and Harleys to a Premium Multiple

Japan

Anicom Holdings, Inc. is a holding company which was established through the merger of Anicom Insurance, Inc., Anicom Frontier, Inc., Anicom Pafe, Inc. The Company provides health insurance policies for pets and operates insurance agency through internet, personal visiting. Anicom Holdings also researches and provides pet business information.

Dream Incubator Inc. nurtures venture companies.  The Company supports companies by providing strategic insights and other consulting services.

Advance Create Co., Ltd operates insurance agency through newspaper advertising, internet, visiting, telemarketing.  The Company operates consulting and advertising services.

SBI Insurance Group Co., Ltd. operates as an insurance company. The Company offers life, non-life, short-term, and other insurance products. SBI Insurance Group provides its services in Japan.

IRRC Corporation offers insurance services. The Company provides insurance consulting, agency, sales supporting, store development, and other related services. IRRC operates in Japan.

CHUOU INTERNATIONAL GROUP CO., LTD. provides Insurance services. The company mainly makes consignment contract with general insurance and life insurance companies and provides insurance agency business.

Japan Post Insurance Co. Ltd. operates life insurance business. The Company offers whole life insurance, education endowment, ordinary endowment, medical insurance, and special endowment insurance. Japan Post Insurance provides services for individuals and businesses throughout Japan.

T&D Holdings, Inc. is a holding company established through the merger of Taiyo Life Insurance, Daido Life Insurance, and T&D Financial Life Insurance. The Company manages life insurance operations for its subsidiaries.

Tokyo Kiraboshi Financial Group, Inc. operates banks. The Company mainly offers financial services. Tokyo Kiraboshi Financial Group provides services in Japan.

Tokyo Kiraboshi Financial Group (7173 JP)

The Bank of Nagoya, Ltd. is a Nagoya based regional bank.  The Bank provides banking services such as deposits, loans, trust funds, and bond issuance.  The Bank of Nagoya also provides financial services such as leasing and credit cards.

Allianz Malaysia Berhad underwrites all classes of general insurance. Through its subsidiaries, the Company underwrites life insurance and investment linked business. Malaysia British Assurance also provides insurance broking and nominee services.

HCI Group, Inc. offers property/casualty insurance.  The Company offers homeowners', condominium owners', and tenants' insurance.

Korean Reinsurance Company is a reinsurer which underwrites life and non-life insurance.  The Company's products include life, fire, marine, auto, casualty, guarantee, pension, long-term, and foreign reinsurance.

AMERISAFE, Inc. provides workers' compensation insurance focused on small to mid-sized employers involved in hazardous industries, principally construction, trucking, logging, agriculture, oil and gas, maritime, and sawmills.

Tongyang Life Insurance offers life insurance services. The Company markets its products through individuals and groups.

Shinkong Insurance Co., Ltd. provides property and casualty insurance services. The Company mainly sells automobile, fire, and marine insurances.

Bangkok Life Assurance PCL offers life insurance services.

Bangkok Insurance Public Company Limited provides non-life insurance including fire, hull, marine, automobile, property, as well as other miscellaneous insurance.

Nuernberger Beteiligungs AG, through its subsidiaries, offers insurance and reinsurance products, including life insurance, disability insurance, accident, fire, theft, liability, health and automobile insurance policies.  The Company provides its services to customers in Germany and in the rest of Europe through associated companies.

Latitude Group Holdings Limited operates as a holding company. The Company, through its subsidiaries, provides personal, commercial, and business insurance products and services, as well as offers loans and credit card solutions. Latitude Group Holdings serves individuals, governments, municipalities, and businesses.

LIFENET INSURANCE COMPANY provides a wide range of life insurance products and services. The company mainly provides the products and services through the internet. The company also provides asset management services.

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Lifenet Insurance Company (7157 JP)

KDDI Deal for Kabu.com (8703 JP) Coming?

Yesterday morning, the Nikkei surprised everyone with an article saying KDDI Corp (9433 JP) was holding negotiations to acquire a stake of up to...

Travis Lundy

SBI Insurance Group IPO: Riding Pets and Harleys to a Premium Multiple

SBI Insurance Group Co Ltd (7326 JP) is the insurance arm of Sbi Holdings (8473 JP), catering to the non-life, life and small amount short-term...

Mio Kato

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