Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On 9 September, <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> announced they would launch a Tender Offer at ¥2,000/share to acquire 27.68% of <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> to take them to 48.00%. This was discussed 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> After the weekend had passed, there was news that Shinsei was looking for a white knight, and the Board would meet this past week to discuss a poison pill warrant issuance. This was discussed 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> on 14 September. During the week, there were suggestions from the Nikkei that Shinsei had approached <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> and <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony Corp (6758 JP)</a> and possibly a "rehabilitation fund" to be white knights. The two corporates already own banks but are relatively and highly independent from bank-led keiretsu affiliations and associations, and the rehabilitation fund would almost necessarily be independent.  Shibata Hisashi, the head of the Regional Banks Association of Japan said on the 15th in a press conference that hostile takeover bids for regional banks were not the preferable outcome because they can unsettle customers and business partners within their region. On 16 September, Shinsei released a long <a href="https://www.shinseibank.com/corporate/en/news/pdf/pdf2021/210916_Announcement_e.pdf" target="_blank" rel="noopener">report</a>, suggesting SBI's account of the relationship to date had been "inaccurate" or "insufficient" and proceeded to clarify things. SBI had said their proposal for a capital and business alliance in September 2019 had been ignored but Shinsei explained the reason for the rejection, and said that SBI accepted it at the time. Shinsei said they had not received a subsequent proposal (despite SBI saying they had made proposals on a continuous basis). Shinsei appears to correct the facts about the Monex tie-up. The details are somewhat eye-opening. <ul>
<li>SBI had proposed it buy up to 48%, then have Shinsei buy back shares from the market to reduce the percentage of general shareholders holding shares. When SBI and the government together owned 90%, they would squeeze out minority shareholders. After doing so, they would repurchase shares held by the government [unspoken is that it would happen at a higher price]. </li>
<li>The Board of Shinsei noted that without control, synergies would not have been meaningful, and buying out minorities at a price lower than the government posted logistical and governance problems. </li>
<li>Furthermore, Shinsei's clarification of the Monex situation seems to not jive with SBI's claims. </li>
</ul>There will always be a "he said, she said" problem where context, perceptions, and explanation do not match, but when they do show up, one side often gets the worse public perception because of the method and timing of presentation. On the 17th September, Shinsei <a href="https://www.shinseibank.com/corporate/en/news/pdf/pdf2021/210917_Announcement2_e.pdf" target="_blank" rel="noopener">announced</a> that it "reserved" its Target Opinion on the SBI Tender Offer based on having sent SBI questions but having not received answers yet. Shinsei also <a href="https://www.shinseibank.com/corporate/en/news/pdf/pdf2021/210917_Announcement1_e.pdf" target="_blank" rel="noopener">announced</a> the introduction of Takeover Defense Measures via Poison PillShareholder Rights (56 pages) to be introduced at an EGM, also <a href="https://www.shinseibank.com/corporate/en/news/pdf/pdf2021/210917_Announcement3_e.pdf" target="_blank" rel="noopener">announcing</a> that the Record Date would be 13 October (and an official announcement would be made 28 September.SBI provided an <a href="https://www.sbigroup.co.jp/news/2021/0917_12649.html" target="_blank" rel="noopener">initial response</a> (in Japanese) saying that the Tender Offer was long enough, and that the Shinsei request for an extension was only a tactic to waste time, and warned they may be required to withdraw the Tender Offer under certain circumstances.That sets the stage we discuss more fully below.

On 9 September, SBI Holdings (8473 JP) announced they would launch a Tender Offer at ¥2,000/share to acquire 27.68% of Shinsei Bank (8303 JP) to take them to 48.00%. This was discussed in SBI (8473) Launches a HOSTILE Tender Offer on Shinsei Bank (8303)! After the weekend had passed, there was news that Shinsei was looking for a white knight, and the Board would meet this past week to discuss a poison pill warrant issuance. This was discussed in Shinsei Looks To A Poison Pill, But Probably Not Really on 14 September. During the week, there were suggestions from the Nikkei that Shinsei had approached Seven &amp; I Holdings (3382 JP) and Sony Corp (6758 JP) and possibly a "rehabilitation fund" to be white knights. The two corporates already own banks but are relatively and highly independent from bank-led keiretsu affiliations and associations, and the rehabilitation fund would almost necessarily be independent.  Shibata Hisashi, the head of the Regional Banks Association of Japan said on the 15th in a press conference that hostile takeover bids for regional banks were not the preferable outcome because they can unsettle customers and business partners within their region. On 16 September, Shinsei released a long report, suggesting SBI's account of the relationship to date had been "inaccurate" or "insufficient" and proceeded to clarify things. SBI had said their proposal for a capital and business alliance in September 2019 had been ignored but Shinsei explained the reason for the rejection, and said that SBI accepted it at the time. Shinsei said they had not received a subsequent proposal (despite SBI saying they had made proposals on a continuous basis). Shinsei appears to correct the facts about the Monex tie-up. The details are somewhat eye-opening. 
SBI had proposed it buy up to 48%, then have Shinsei buy back shares from the market to reduce the percentage of general shareholders holding shares. When SBI and the government together owned 90%, they would squeeze out minority shareholders. After doing so, they would repurchase shares held by the government [unspoken is that it would happen at a higher price]. 
The Board of Shinsei noted that without control, synergies would not have been meaningful, and buying out minorities at a price lower than the government posted logistical and governance problems. 
Furthermore, Shinsei's clarification of the Monex situation seems to not jive with SBI's claims. 
There will always be a "he said, she said" problem where context, perceptions, and explanation do not match, but when they do show up, one side often gets the worse public perception because of the method and timing of presentation. On the 17th September, Shinsei announced that it "reserved" its Target Opinion on the SBI Tender Offer based on having sent SBI questions but having not received answers yet. Shinsei also announced the introduction of Takeover Defense Measures via Poison PillShareholder Rights (56 pages) to be introduced at an EGM, also announcing that the Record Date would be 13 October (and an official announcement would be made 28 September.SBI provided an initial response (in Japanese) saying that the Tender Offer was long enough, and that the Shinsei request for an extension was only a tactic to waste time, and warned they may be required to withdraw the Tender Offer under certain circumstances.That sets the stage we discuss more fully below.

Shinsei To Launch a Poison Pill; SBI Plays Coy, So We Wait

On Thursday 9 September, <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> announced a Tender Offer aimed at lifting its stake in <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> to 48% at a sharp premium (up 46%). It hadn't warned Shinsei Bank of its intention to do so.Kana Inagaki and Leo Lewis at the FT had a <a href="https://www.ft.com/content/1a863d9d-b081-4a9e-99d7-dbcd828aab75" target="_blank" rel="noopener">story</a> early Thursday evening describing the situation - the most concise and accurate take I have seen. I followed up hours later with something wordier 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> On Thursday night the ADRs rose to ¥1930/share equivalent. On Friday, the stock went limit up, Smartkarma held a Flash Webinar, and <a href="https://www.smartkarma.com/profiles/mio-kato" target="_blank" data-smartkarma-citation="accounts:713" rel="noopener">Mio Kato</a> added <a href="https://www.smartkarma.com/insights/shinsei-bank-valuations" target="_blank" data-smartkarma-citation="insights:57474" rel="noopener">Shinsei Bank - Valuations</a> to the anthology. Over the weekend, articles were everywhere in the media, but they didn't say much. Shinsei hadn't told them what to say and SBI had already done the talking for its part. Trading resumed on Monday and the stock opened above the Tender Offer Price ¥2000/share before closing a bit lower. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/720/original/Screenshot+2021-09-14+at+7.25.24+PM.png?1631618746" class="editor-image img-responsive" data-smartkarma-image-id="229720"></figure></section><hr>Yesterday saw articles suggesting Shinsei Bank would send SBI a list of questions to answer, would look at what they got back, and then would decide their opinion. <h3>But TODAY we see the real start of the game. </h3>The Nikkei <a href="https://www.nikkei.com/article/DGXZQOUB146UA0U1A910C2000000/?unlock=1" target="_blank" rel="noopener">reported</a> in a short article a few hours ago that Shinsei's board would meet this week to approve an "emergency" poison pill defence. How that would work might matter, but it might not. More below the fold.

On Thursday 9 September, SBI Holdings (8473 JP) announced a Tender Offer aimed at lifting its stake in Shinsei Bank (8303 JP) to 48% at a sharp premium (up 46%). It hadn't warned Shinsei Bank of its intention to do so.Kana Inagaki and Leo Lewis at the FT had a story early Thursday evening describing the situation - the most concise and accurate take I have seen. I followed up hours later with something wordier in SBI (8473) Launches a HOSTILE Tender Offer on Shinsei Bank (8303)! On Thursday night the ADRs rose to ¥1930/share equivalent. On Friday, the stock went limit up, Smartkarma held a Flash Webinar, and Mio Kato added Shinsei Bank - Valuations to the anthology. Over the weekend, articles were everywhere in the media, but they didn't say much. Shinsei hadn't told them what to say and SBI had already done the talking for its part. Trading resumed on Monday and the stock opened above the Tender Offer Price ¥2000/share before closing a bit lower. Yesterday saw articles suggesting Shinsei Bank would send SBI a list of questions to answer, would look at what they got back, and then would decide their opinion. But TODAY we see the real start of the game. The Nikkei reported in a short article a few hours ago that Shinsei's board would meet this week to approve an "emergency" poison pill defence. How that would work might matter, but it might not. More below the fold.

Shinsei Looks To A Poison Pill, But Probably Not Really

David Blennerhassett

Last Week in Event SPACE: Shinsei Bank, Hongkong Land, SOHO China, Bank Rakyat, Oil Search, JCNC

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.

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As SBI goes hostile on Shinsei Bank, Travis has covered the details on the tender <a href="https://www.smartkarma.com/dashboard?collection=all-insights&amp;item=57426" target="_blank" rel="noopener">here</a>. In order to examine the potential resting place of Shinsei Bank shares after SBI Holdings’ tender concludes, we provide below a valuation comparison vs. a variety of peers.

As SBI goes hostile on Shinsei Bank, Travis has covered the details on the tender here. In order to examine the potential resting place of Shinsei Bank shares after SBI Holdings’ tender concludes, we provide below a valuation comparison vs. a variety of peers.

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

In today's flash webinar, <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> will discuss the hostile tender offer for <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> from <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>. Travis will go over the background and opportunities:<ul>
<li>SBI has been building positions in regional banks with an apparent goal of creating a Super-Regional to compete with the big boys.</li>
<li>After creeping up to near 10% of Shinsei by end 2020 (having proposed an alliance the year before), and then from 10% to 20% in Q1 2021, SBI tried to oust 4 Shinsei directors in June. What started with guarded talks have become no talks, and SBI has launched a bid to own up to 48% of Shinsei.</li>
<li>Shinsei has options, but not great ones.</li>
<li>And this would change everything for shareholders.</li>
</ul><h3>The webinar will be hosted on Friday, 10/Sep/2021, 3.00pm SGT/HKT. It will be moderated by <a href="https://www.linkedin.com/in/lee-mitchell-3b616b37" target="_blank" rel="noopener">Lee Mitchell</a>.</h3>

In today's flash webinar, Travis Lundy will discuss the hostile tender offer for Shinsei Bank (8303 JP) from SBI Holdings (8473 JP). Travis will go over the background and opportunities:
SBI has been building positions in regional banks with an apparent goal of creating a Super-Regional to compete with the big boys.
After creeping up to near 10% of Shinsei by end 2020 (having proposed an alliance the year before), and then from 10% to 20% in Q1 2021, SBI tried to oust 4 Shinsei directors in June. What started with guarded talks have become no talks, and SBI has launched a bid to own up to 48% of Shinsei.
Shinsei has options, but not great ones.
And this would change everything for shareholders.
The webinar will be hosted on Friday, 10/Sep/2021, 3.00pm SGT/HKT. It will be moderated by Lee Mitchell.

Flash Webinar | SBI’s Hostile Tender to Control Shinsei Bank

Japan

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 To Launch a Poison Pill; SBI Plays Coy, So We Wait

Shinsei announced Friday it would later announce a Poison Pill at end-Sep, followed by an EGM Record Date in mid-Oct. This is setting up to go full...

Travis Lundy

Shinsei Looks To A Poison Pill, But Probably Not Really

Shinsei is said to be looking to a poison pill, even before it has the answers to questions back from SBI. That tells you what you need to know....

Travis Lundy

Last Week in Event SPACE: Shinsei Bank, Hongkong Land, SOHO China, Bank Rakyat, Oil Search, JCNC

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Shinsei Bank - Valuations

In order to examine the potential resting place of Shinsei Bank shares after SBI Holdings’ tender concludes, we provide below a valuation...

Mio Kato

Flash Webinar | SBI’s Hostile Tender to Control Shinsei Bank

In today's flash webinar, Travis Lundy will discuss the hostile tender offer for Shinsei Bank (8303 JP) from SBI Holdings (8473 JP)

Smartkarma Research

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