Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Berkshire appears set to exit <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> partially or in full. But why signal to market well in advance?</li>
<li>
<a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a>'s buyback should be impactful. They could do another one afterwards as they have lots of cash. This is a raging buy. Buy now. With both hands.</li>
<li>The BOJ was expected to change its ETF allocations. It stopped buying Nikkei 225 and JPX Nikkei 400 ETFs. As the world moves more to passive, expect float to decrease.</li>
</ul>


Berkshire appears set to exit BYD (1211 HK) partially or in full. But why signal to market well in advance?

United Tractors (UNTR IJ)'s buyback should be impactful. They could do another one afterwards as they have lots of cash. This is a raging buy. Buy now. With both hands.
The BOJ was expected to change its ETF allocations. It stopped buying Nikkei 225 and JPX Nikkei 400 ETFs. As the world moves more to passive, expect float to decrease.


Last Week in Event SPACE: BYD, Astra/United Tractor, Japan Passive, AGL, Genting Singapore

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<ul>
<li>Capco agreed to acquire Shaftesbury in a stock swap reverse takeover transaction (1 SHB LN x 3.356 CAPC LN). Shaftesbury shareholders will own 53% while Capco shareholders will own 47%.</li>
<li>The market is not reacting positively to the deal. As per the exchange ratio, the deal implies a transfer of value from Shaftesbury to Capco, in my view.</li>
<li>The spread is trading at a 3.4% premium. Although the premium is tightening, I am still unsure many Shaftesbury shareholders would like to accept the offer in its current terms.</li>
</ul>


Capco agreed to acquire Shaftesbury in a stock swap reverse takeover transaction (1 SHB LN x 3.356 CAPC LN). Shaftesbury shareholders will own 53% while Capco shareholders will own 47%.
The market is not reacting positively to the deal. As per the exchange ratio, the deal implies a transfer of value from Shaftesbury to Capco, in my view.
The spread is trading at a 3.4% premium. Although the premium is tightening, I am still unsure many Shaftesbury shareholders would like to accept the offer in its current terms.


<ul>
<li>Capco and Shaftesbury are in advanced merger talks. PUSU deadline is 4 June. This is a defensive merger. Both companies have underperformed FTSE Nareit Equity REITS index. </li>
<li>The merged company is likely gain bargaining power in rent negotiations. The estimated savings range could amount to ~10%-15% of the combined operating cost base.</li>
<li>Norges and Capco together own c.51% of Shaftesbury. Recommendation is long 1 SHB LN / short 3.4885 CAPC LN. There is some interloper risk, in my view.</li>
</ul>


Capco and Shaftesbury are in advanced merger talks. PUSU deadline is 4 June. This is a defensive merger. Both companies have underperformed FTSE Nareit Equity REITS index. 
The merged company is likely gain bargaining power in rent negotiations. The estimated savings range could amount to ~10%-15% of the combined operating cost base.
Norges and Capco together own c.51% of Shaftesbury. Recommendation is long 1 SHB LN / short 3.4885 CAPC LN. There is some interloper risk, in my view.


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Thematic (Sector/Industry)

The Brexit vote result is a clear negative for independent investment banks, and major banks with sizable crossborder transaction flows to a lesser extent. We plan to reduce the fair value estimates for Nomura Holdings as the company remains poorly positioned as a subscale investment bank with high conduct risk and repeated failures in expanding the global fixed income franchise. Nomura makes significant use of three subsidiaries under European Economic Area, or EEA, passporting privileges to reach its wholesale clients in continental Europe. For other banks, the impacts are likely to be less acute relative to Nomura as they do not hold too many derivative contracts under United Kingdom entities, and their direct exposures are largely limited to traditional lending functions to support foreign subsidiaries of the Japanese parent companies.Analysts: Mari Kumagai &amp; Michael Wu, CAIA

The Brexit vote result is a clear negative for independent investment banks, and major banks with sizable crossborder transaction flows to a lesser extent. We plan to reduce the fair value estimates for Nomura Holdings as the company remains poorly positioned as a subscale investment bank with high conduct risk and repeated failures in expanding the global fixed income franchise. Nomura makes significant use of three subsidiaries under European Economic Area, or EEA, passporting privileges to reach its wholesale clients in continental Europe. For other banks, the impacts are likely to be less acute relative to Nomura as they do not hold too many derivative contracts under United Kingdom entities, and their direct exposures are largely limited to traditional lending functions to support foreign subsidiaries of the Japanese parent companies.Analysts: Mari Kumagai &amp; Michael Wu, CAIA

The Brexit Vote Result Means Additional Headwinds ForJapanese Banks

United Kingdom

Shaftesbury plc is a real estate company. The Company invests in commercial properties and improves them through refurbishment and active management, holding them for rental income and capital appreciation.  Shaftesbury operates in the United Kingdom.

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Shaftesbury PLC (SHB LN)

Last Week in Event SPACE: BYD, Astra/United Tractor, Japan Passive, AGL, Genting Singapore

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

Shaftesbury/Capco: Unattractive Spread

As per the current terms, Shaftesbury shareholders seem worse off, in my view, hence no surprise that Shaftesbury shares are underperforming and...

Jesus Rodriguez Aguilar

Shaftesbury/Capco: Defensive Merger

After extended share price declines, Shaftesbury and Capco are discussing a defensive merger, supported by Norges, top shareholder in both firms.

Jesus Rodriguez Aguilar

The Brexit Vote Result Means Additional Headwinds ForJapanese Banks

The Brexit vote result is a clear negative for independent investment banks, and major banks with sizable crossborder transaction flows to a lesser...

Morningstar, Inc.

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