Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<li>This week will see the Shinsei shareholder vote regarding the Poison Pill which will determine whether SBI's Tender Offer to get to 48% will go forward.</li>
<li>Murakami-San and entities own 7.43% of shares out (and 9.16% of voting rights) as of 12 November. </li>
<li>His now-large presence in the shareholder register makes a post-vote outcome much more interesting. </li>
</ul>


This week will see the Shinsei shareholder vote regarding the Poison Pill which will determine whether SBI's Tender Offer to get to 48% will go forward.
Murakami-San and entities own 7.43% of shares out (and 9.16% of voting rights) as of 12 November. 
His now-large presence in the shareholder register makes a post-vote outcome much more interesting. 


Shinsei TOB & Poison Pill - Murakami-San's Presence Makes Things Complicated, But in a FUN 🦄 Way

David Blennerhassett

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This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.
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I number 49, mostly firm, deals around the region.
</div>
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More below the fold.
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This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.


I number 49, mostly firm, deals around the region.


More below the fold.


Asia-Pac Weekly Risk Arb Summary: Afterpay, Link Admin, Razer, AusNet, First Service

There is an interesting <a href="https://www.zaikai.jp/articles/detail/1046" target="_blank" rel="noopener">article</a> out in Zaikai Online (財界オンライン zaikai.jp) today which talks about the possibility of how the FSA might vote in the <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303 JP)</a> EGM which comes in just under three weeks.
The two government entities which own the stock are the Resolution &amp; Collection Corporation (RCC) which owns 26.912mm shares, and the Deposit Insurance Corporation of Japan (DICJ), which owns 20.00mm shares. Together their 46.912mm shares are worth about 22.31% of voting rights, which is a bit more than the total owned by <a href="https://www.smartkarma.com/entities/sbi-holdings-inc" target="_blank" data-smartkarma-citation="entities:10928:1" rel="noopener">SBI Holdings (8473 JP)</a> which is opposing the poison pill to be voted on at the EGM. 
The FSA will be the decision-maker on the vote as the DICJ is an FSA entity and the RCC is a subsidiary of a subsidiary of the DICJ. 
I discussed the possible outcomes for tendering by the government entities in <a href="https://www.smartkarma.com/insights/sbi-8473-launches-a-hostile-tender-offer-on-shinsei-bank-8303" target="_blank" data-smartkarma-citation="insights:57426" rel="noopener">SBI (8473) Launches a HOSTILE Tender Offer on Shinsei Bank (8303)!</a> and I discussed the possibilities of how they might vote for a poison pill in <a href="https://www.smartkarma.com/insights/shinsei-looks-to-a-poison-pill-but-probably-not-really" target="_blank" data-smartkarma-citation="insights:57630" rel="noopener">Shinsei Looks To A Poison Pill, But Probably Not Really</a>. 
The tone of the article linked above is interesting. I think worth taking another look. 
Late today, Japanese news agency Jiji reported that US-based international proxy advisor Glass Lewis came out in support of the Poison Pill at the Shinsei EGM. This surprised the market and shares - which had been trading in the ¥1,860-1,870/share range after last week's large TOPIX and JPX Nikkei 400 index down-weight fell sharply - ending the day down more than 3% - a big move for a risk arb situation.
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While the Glass Lewis and ISS voting guidelines suggest that they generally vote against Poison Pills, there are conditions under which they could support. They don't say they will endorse a poison pill if managements do meet those hurdles, just that they could not support if they don't. Shinsei's poison pill plan met all those hurdles as it proposed in its 21 October 2021 <a href="https://www.shinseibank.com/corporate/en/news/pdf/pdf2021/211021_announcement1_e.pdf" target="_blank" rel="noopener">document</a> (p27-28) where it came out against the SBI Tender Offer, officially. 
I had not expected Glass Lewis or ISS to endorse the Poison Pill but it was not a slam dunk they would knock it back. IF the proxy advisors knocked it back, it was a high probability event that the Poison Pill would get voted down.
The result of the EGM might be less assured now that Glass Lewis has supported. But it is complicated. The result of the EGM could have effects on future buybacks, future index events, and profitability, and the way the shares move prior to the EGM could affect how people vote at the EGM. The shares at ¥1650 might trigger a different decision than the shares at ¥1,900.
Much more discussion below the fold. 

</section>

There is an interesting article out in Zaikai Online (財界オンライン zaikai.jp) today which talks about the possibility of how the FSA might vote in the Shinsei Bank (8303 JP) EGM which comes in just under three weeks.
The two government entities which own the stock are the Resolution &amp; Collection Corporation (RCC) which owns 26.912mm shares, and the Deposit Insurance Corporation of Japan (DICJ), which owns 20.00mm shares. Together their 46.912mm shares are worth about 22.31% of voting rights, which is a bit more than the total owned by SBI Holdings (8473 JP) which is opposing the poison pill to be voted on at the EGM. 
The FSA will be the decision-maker on the vote as the DICJ is an FSA entity and the RCC is a subsidiary of a subsidiary of the DICJ. 
I discussed the possible outcomes for tendering by the government entities in SBI (8473) Launches a HOSTILE Tender Offer on Shinsei Bank (8303)! and I discussed the possibilities of how they might vote for a poison pill in Shinsei Looks To A Poison Pill, But Probably Not Really. 
The tone of the article linked above is interesting. I think worth taking another look. 
Late today, Japanese news agency Jiji reported that US-based international proxy advisor Glass Lewis came out in support of the Poison Pill at the Shinsei EGM. This surprised the market and shares - which had been trading in the ¥1,860-1,870/share range after last week's large TOPIX and JPX Nikkei 400 index down-weight fell sharply - ending the day down more than 3% - a big move for a risk arb situation.


While the Glass Lewis and ISS voting guidelines suggest that they generally vote against Poison Pills, there are conditions under which they could support. They don't say they will endorse a poison pill if managements do meet those hurdles, just that they could not support if they don't. Shinsei's poison pill plan met all those hurdles as it proposed in its 21 October 2021 document (p27-28) where it came out against the SBI Tender Offer, officially. 
I had not expected Glass Lewis or ISS to endorse the Poison Pill but it was not a slam dunk they would knock it back. IF the proxy advisors knocked it back, it was a high probability event that the Poison Pill would get voted down.
The result of the EGM might be less assured now that Glass Lewis has supported. But it is complicated. The result of the EGM could have effects on future buybacks, future index events, and profitability, and the way the shares move prior to the EGM could affect how people vote at the EGM. The shares at ¥1650 might trigger a different decision than the shares at ¥1,900.
Much more discussion below the fold. 



Further Shinsei Complications: Glass Lewis Endorses the Poison Pill. Will the FSA Vote?

<a href="https://www.smartkarma.com/entities/sbi-holdings-inc" target="_blank" data-smartkarma-citation="entities:10928:1" rel="noopener">SBI Holdings (8473 JP)</a> reported earnings after the close of 28 October. Earnings were high, and ROE achieved a record high. There was considerable good news in the results, but results were largely as expected and the stock price didn't do much. 
Most notable, I thought, in the analyst meeting afterwards was a barrage of comments about <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303 JP)</a> seemingly meant to embarrass and disparage Shinsei senior management, and possibly the entire Shinsei management layer.
He likened the fact that Shinsei had not repaid public monies this long after the injection/conversion to "theft" and spent considerable time comparing apples to bananas.
It was not encouraging. Furthermore, he also said that he was "overpaying" at ¥2,000 and had no intention of raising his price. 
The entire call was interesting, and aggressive, and you can find the call and transcript  on Smartkarma <a href="https://www.smartkarma.com/entities/sbi-holdings-inc/events?item=7805" target="_blank" rel="noopener">here</a>. 
More below the fold.

SBI Holdings (8473 JP) reported earnings after the close of 28 October. Earnings were high, and ROE achieved a record high. There was considerable good news in the results, but results were largely as expected and the stock price didn't do much. 
Most notable, I thought, in the analyst meeting afterwards was a barrage of comments about Shinsei Bank (8303 JP) seemingly meant to embarrass and disparage Shinsei senior management, and possibly the entire Shinsei management layer.
He likened the fact that Shinsei had not repaid public monies this long after the injection/conversion to "theft" and spent considerable time comparing apples to bananas.
It was not encouraging. Furthermore, he also said that he was "overpaying" at ¥2,000 and had no intention of raising his price. 
The entire call was interesting, and aggressive, and you can find the call and transcript  on Smartkarma here. 
More below the fold. 

Aggressive Commentary by SBI About Shinsei at Earnings

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

There was a time when the number of companies introducing takeover defense provisions increased considerably, but in recent years the number of listed companies introducing such provisions has decreased considerably. Many companies eliminated the takeover defense provisions due to the strong opposition from foreign shareholders. Anti-takeover measures do not seem to be a major subject of discussion in the Corporate Governance Code, which is currently under consideration for revision. The following table shows the status of 3,755 companies listed on the Tokyo Stock Exchange as of October 2021 that have adopted takeover defense measures and those that have not. As shown in the table below, the number of companies that have adopted takeover defense measures is 269 out of all listed companies, which is 7.2% of all listed companies. Against this backdrop, takeover defense measures are once again in the spotlight, as Shinsei Bank (8303) recently countered SBI Holdings (8473)'s TOB by resolving to issue stock acquisition rights. In this article, I would like to consider takeover defense measures.

There was a time when the number of companies introducing takeover defense provisions increased considerably, but in recent years the number of listed companies introducing such provisions has decreased considerably. Many companies eliminated the takeover defense provisions due to the strong opposition from foreign shareholders. Anti-takeover measures do not seem to be a major subject of discussion in the Corporate Governance Code, which is currently under consideration for revision. The following table shows the status of 3,755 companies listed on the Tokyo Stock Exchange as of October 2021 that have adopted takeover defense measures and those that have not. As shown in the table below, the number of companies that have adopted takeover defense measures is 269 out of all listed companies, which is 7.2% of all listed companies. Against this backdrop, takeover defense measures are once again in the spotlight, as Shinsei Bank (8303) recently countered SBI Holdings (8473)'s TOB by resolving to issue stock acquisition rights. In this article, I would like to consider takeover defense measures.

Japan's Governance: Takeover Defense Provisions

Japan

The Bank of Kyoto, Ltd. is a regional bank in Kyoto.  The Bank provides banking services including deposits, savings, loans, foreign exchange transactions, and securities investments.  The Bank of Kyoto also provides financial services such as letter of credit, leasing, loans, and credit cards.

Mebuki Financial Group Inc. is a holding company established through the merger of Joyo Bank and Ashikaga Bank. As a financial group, the Company offers deposits, Loans, foreign exchange transactions, commercial and trust banking. Mebuki Financial Group also provides financial services such as letter of credit, credit cards and consulting.

The Hachijuni Bank, Ltd. is a regional bank based in Nagano Prefecture. The Bank provides banking services such as deposits, loans, foreign exchange transactions, and trust accounts. The Bank also provides financial services such as leasing, credit cards, credit guarantee, debt recovery, trading, and venture capital and operates branches overseas.

Rakuten Bank, Ltd. operates as an Internet based bank. The Company provides banking services including deposits, loans, exchange transactions, and other services. Rakuten Bank also provides financial services including investment trusts, securities, credit and cash cards, lottery tickets, and others.

Fukuoka Financial Group, Inc. is a holding company established through the merger of the Bank of Fukuoka and Kumamoto Family Bank. As a financial group, the Company provides banking services including deposits, loans, foreign currency transactions. The Company also provides other financial services such as credit card, letter of credit, and leasing services.

Aozora Bank, Ltd. provides banking services including deposits, savings, loans, foreign exchange transactions, and securities investments. Aozora Bank also provides services such as trust account, resolution and collection, and venture capital.

The 77 Bank, Ltd. is a regional bank in Tohoku area.  The Bank provides general banking services including deposits, loans, and exchange transactions. The Bank also provides others financial services such as securities brokerage, trust banking, letter of credit, leasing, credit cards, and computer services.

The Gunma Bank, Ltd. is a regional bank based in Gunma Prefecture.  The Bank provides banking services such as deposits, loans, and foreign exchange transaction.  The Gunma Bank also provides financial services such as leasing, credit cards, letter of credit, and investment advisory, and develops information systems.

Yamaguchi Financial Group, Inc. is a holding company established through the merger of Yamaguchi Bank and Momiji Holdings. The Group provides variety of financial services such as deposits, loans, foreign exchange transactions, leasing and credit cards.

Kyushu Financial Group, Inc. is a holding company established through the merger of Higo Bank and Kagoshima Bank.  The Bank provides banking services such as deposits, loans, and exchange transactions.  Kyushu Financial Group also provides other financial services including security brokerage, credit cards, leasing, and letters of credit.

Atlantic Union Bankshares Corporation provides banking services. The Bank checking accounts, lending, credit cards, online and mobile banking, and wealth and treasury management services. Atlantic Union Bankshares serves customers in the United States.

International Bancshares Corporation, through its bank subsidiaries, provides commercial and retail banking services through offices in south and southeast Texas.  The Bank accepts deposits from the general public and uses those funds to make a variety of loans.

Fulton Financial Corporation is a multi-bank holding company. The Banks offer a full range of general retail and commercial banking services, including deposits, loans, equipment leasing and financing, and credit cards. Fulton operates in Pennsylvania, Maryland, Delaware, and New Jersey.

The Bank of East Asia, Limited and its subsidiaries provide general banking, related financial, business corporate, and investor services.

Huishang Bank Corporation Limited is a commercial bank. The Bank provides banking services including loans, money market operations, treasury business, investment and trading services, and valet transactions.

Hong Leong Financial Group Berhad is a banking and financial services holding company. The Company provides a range of services including commercial and consumer banking, investment banking, and insurance broking. Through its subsidiaries, Hong Leong Financial underwrites life/general insurance, provides funds management, corporate advisory, and stock and share broking services.

Ameris Bancorp is a multi-bank holding company. The Banks provide a broad range of retail and commercial banking services to its customers, including checking and savings deposits, commercial and consumer loans, trust services, discount brokerage services, and electronic funds transfer services. Ameris Bancorp operates in Georgia, Florida, and Alabama.

United Community Banks, Inc. is a multi-bank holding company with locations throughout north Georgia and western North Carolina.  The Banks are community oriented and offer retail and corporate banking services including checking, savings, and time deposit accounts, secured and unsecured loans, wire transfers, trust services, and rental of safe deposit boxes.

Associated Banc-Corp is a Midwest banking franchise headquartered in Green Bay, Wisconsin. The Bank offers a full range of financial products and services through banking locations serving communities throughout Wisconsin, Illinois, and Minnesota, and commercial financial services in Indiana, Michigan, Missouri, Ohio and Texas.

ServisFirst Bancshares Inc. operates as the holding company for ServisFirst Bank that provides consumer and commercial banking services. The Company offers various deposit products, such as demand, time, and savings deposits, as well as negotiable orders of withdrawal accounts, checking accounts, money market accounts, certificates of deposit, and IRA accounts.

SBI Shinsei Bank, Ltd. provides banking services including deposits, loans, and foreign exchange transaction, as well as investment trust service and issuance of long-term bonds.

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SBI Shinsei Bank (8303 JP)

Shinsei TOB & Poison Pill - Murakami-San's Presence Makes Things Complicated, But in a FUN 🦄 Way

The Shinsei EGM is on the 25th. The Poison Pill looks like it is under threat if the DICJ doesn't take sides, which leaves an interesting outcome...

Travis Lundy

Asia-Pac Weekly Risk Arb Summary: Afterpay, Link Admin, Razer, AusNet, First Service

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Further Shinsei Complications: Glass Lewis Endorses the Poison Pill. Will the FSA Vote?

Things are getting complicated further. The FSA is mulling how to vote and Glass Lewis has decided to support the poison pill. Where to price the...

Travis Lundy

Aggressive Commentary by SBI About Shinsei at Earnings

SBI reported on Oct28. CEO Kitao-san hosted the call, aggressively disparaging Shinsei mgmt, comparing Shinsei to comps negatively (mostly apples...

Travis Lundy

Japan's Governance: Takeover Defense Provisions

Recently, anti-takeover measures have been in the spotlight again as Shinsei Bank countered TOB of SBI Holdings by resolving to issue stock...

Metrical Inc

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