Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>A KKR led consortium has made a conditional, non-binding, indicative proposal to acquire 100% of the shares in <a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> at A$88/share in cash.</li>
<li>The offer values <a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> at A$20.14bn and is a premium of 36.7% to the last close. The premium is over 30% even using longer term VWAPs.</li>
<li>There will be changes to the S&amp;P/ASX family of indices to maintain the number of index members. We will know more once an indicative timeline is published.</li>
</ul>


A KKR led consortium has made a conditional, non-binding, indicative proposal to acquire 100% of the shares in Ramsay Health Care (RHC AU) at A$88/share in cash.
The offer values Ramsay Health Care (RHC AU) at A$20.14bn and is a premium of 36.7% to the last close. The premium is over 30% even using longer term VWAPs.
There will be changes to the S&amp;P/ASX family of indices to maintain the number of index members. We will know more once an indicative timeline is published.


Ramsay Health Care (RHC AU): Indicative Proposal from KKR & Index Implications

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The S&amp;P DJI Index team announced the replacement for <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> when it is deleted from the S&amp;P/ASX200 Friday at the close: <a href="https://www.smartkarma.com/entities/arena-reit" target="_blank" data-smartkarma-citation="entities:12209:1" rel="noopener">Arena Reit (ARF AU)</a> </li>
<li>There are other changes to sub-indices which are not publicly announced but which should align with previous analysis</li>
<li>This insight provides estimates for the index events Friday and ways to play them.</li>
</ul>


The S&amp;P DJI Index team announced the replacement for Ausnet Services (AST AU) when it is deleted from the S&amp;P/ASX200 Friday at the close: Arena Reit (ARF AU) 
There are other changes to sub-indices which are not publicly announced but which should align with previous analysis
This insight provides estimates for the index events Friday and ways to play them.


This morning 18 October, 2021, <a href="https://www.smartkarma.com/entities/homeco-daily-needs-reit" target="_blank" data-smartkarma-citation="entities:33526:1" rel="noopener">HomeCo Daily Needs REIT (HDN AU)</a> and <a href="https://www.smartkarma.com/entities/aventus-group" target="_blank" data-smartkarma-citation="entities:25897:1" rel="noopener">Aventus Group (AVN AU)</a> announced they had entered into a Binding Scheme Implementation Deed for HDS to acquire AVN through a Scheme of Arrangement. This will create a combined portfolio of A$4.1bn and a combined market cap of A$3.2bn on a pro-forma basis. Terms are that AVN security-holders will receive 2.2 HDN securities AND either A$0.285/unit of cash or 0.038 HMC securities (either or, not a combination). HDN is contributing 93% of the total consideration paid to AVN holders. <a href="https://www.smartkarma.com/entities/home-consortium-ltd" target="_blank" data-smartkarma-citation="entities:29082:1" rel="noopener">Home Consortium Ltd (HMC AU)</a> is contributing the other 7%, which will lower HMC's ownership of HDN post-merger. The consideration results in a premium of 15.3% from the Friday close, a 16.4% premium to one-month VWAP, and a 41.9% premium to 30 June 2021. There is ~4% accretion involved for security-holders of both sides assuming the cash option is take-up.Both HDN and AVN boards unanimously recommend/support the deal (AVN in the absence of a superior proposal) and AVN shareholders and directors representing 29.3% of AVN voting rights (22.6% by BBRC Retail and 6.7% by the AVN Board) have agreed to vote for the Scheme. Separately, HMC has done a deal to buy a 6% stake in AVN directly from BBRC at a cash amount equal to the Offer Price. That will leave the HMC holding at 13.5% post-merger.HDN is the smaller of the two and existing AVN shareholders will end up with nearly 57% of the total NEWCO HDN shares out after the deal (AVN minorities will have 47.1% while after selling 6% to HMC, BBRC will have 10.1%). HMC will have 13.5% of the post-merger business. Importantly, the entire management team of AVN is expected to join HMC, and the CEO and CFO of AVN will become CEO and CFO, respectively, of HDN MergeCo.The Scheme Booklet will be out in about two months, the Scheme meeting executed in late January 2022, and implementation will be mid-February under the proposed schedule. This looks like a decent deal, and a done deal.

This morning 18 October, 2021, HomeCo Daily Needs REIT (HDN AU) and Aventus Group (AVN AU) announced they had entered into a Binding Scheme Implementation Deed for HDS to acquire AVN through a Scheme of Arrangement. This will create a combined portfolio of A$4.1bn and a combined market cap of A$3.2bn on a pro-forma basis. Terms are that AVN security-holders will receive 2.2 HDN securities AND either A$0.285/unit of cash or 0.038 HMC securities (either or, not a combination). HDN is contributing 93% of the total consideration paid to AVN holders. Home Consortium Ltd (HMC AU) is contributing the other 7%, which will lower HMC's ownership of HDN post-merger. The consideration results in a premium of 15.3% from the Friday close, a 16.4% premium to one-month VWAP, and a 41.9% premium to 30 June 2021. There is ~4% accretion involved for security-holders of both sides assuming the cash option is take-up.Both HDN and AVN boards unanimously recommend/support the deal (AVN in the absence of a superior proposal) and AVN shareholders and directors representing 29.3% of AVN voting rights (22.6% by BBRC Retail and 6.7% by the AVN Board) have agreed to vote for the Scheme. Separately, HMC has done a deal to buy a 6% stake in AVN directly from BBRC at a cash amount equal to the Offer Price. That will leave the HMC holding at 13.5% post-merger.HDN is the smaller of the two and existing AVN shareholders will end up with nearly 57% of the total NEWCO HDN shares out after the deal (AVN minorities will have 47.1% while after selling 6% to HMC, BBRC will have 10.1%). HMC will have 13.5% of the post-merger business. Importantly, the entire management team of AVN is expected to join HMC, and the CEO and CFO of AVN will become CEO and CFO, respectively, of HDN MergeCo.The Scheme Booklet will be out in about two months, the Scheme meeting executed in late January 2022, and implementation will be mid-February under the proposed schedule. This looks like a decent deal, and a done deal. 

HomeCo Daily Needs REIT (HDN AU) To Merge with Aventus (AVN AU) In Self-Takeunder

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.

<a href="https://www.smartkarma.com/entities/aventus-group" target="_blank" data-smartkarma-citation="entities:25897:1" rel="noopener">Aventus Group (AVN AU)</a> is Australia’s largest fully integrated owner, manager and developer of large format retail centres in Australia. Aventus entered a scheme implementation deed to implement a merger with <a href="https://www.smartkarma.com/entities/homeco-daily-needs-reit" target="_blank" data-smartkarma-citation="entities:33526:1" rel="noopener">HomeCo Daily Needs REIT (HDN AU)</a> and <a href="https://www.smartkarma.com/entities/home-consortium-ltd" target="_blank" data-smartkarma-citation="entities:29082:1" rel="noopener">Home Consortium Ltd (HMC AU)</a>. Aventus securityholders will be offered 2.200 HDN units for every 1 unit in Aventus Retail Property Fund (93% of transaction value) and A$0.285 cash or 0.038 HMC securities for every 1 share in Aventus Holdings Limited (7% of transaction value). The implied offer price of A$3.82 per Aventus share is a 15.3% premium to the unaffected price of A$3.31 (15 October). The offer price will not be reduced for any distributions announced by Aventus, HDN and HMC prior to the implementation. Post-merger, Aventus securityholders will own 47.1% of the merged group.The scheme is conditional on AVN securityholder approval by at least 75% of the votes cast and 50% securityholders voting. Brett Blundy Retail Capital (BBRC) and the Aventus Board which represents 22.6% and 6.7% of AVN securities, respectively, intend to vote in favour of the merger. The scheme is also conditional on HDN unitholder approval by at least 50% of votes cast (HMC cannot vote). <div class="content-highlight">We think that recommended offer is attractive both in terms of historical multiples and share prices for Aventus securityholders. The merger is also FFO and NTA accretive to Aventus securityholders. While the merger is FFO accretive, it is NTA dilutive to HDN unitholders. Nevertheless, the strong strategic rationale for the merger should gain support from HDN unitholders. At the last close prices of Aventus and HDN, Aventus’ shares are trading at 3.6% gross spread to the indicative offer.</div>

Aventus Group (AVN AU) is Australia’s largest fully integrated owner, manager and developer of large format retail centres in Australia. Aventus entered a scheme implementation deed to implement a merger with HomeCo Daily Needs REIT (HDN AU) and Home Consortium Ltd (HMC AU). Aventus securityholders will be offered 2.200 HDN units for every 1 unit in Aventus Retail Property Fund (93% of transaction value) and A$0.285 cash or 0.038 HMC securities for every 1 share in Aventus Holdings Limited (7% of transaction value). The implied offer price of A$3.82 per Aventus share is a 15.3% premium to the unaffected price of A$3.31 (15 October). The offer price will not be reduced for any distributions announced by Aventus, HDN and HMC prior to the implementation. Post-merger, Aventus securityholders will own 47.1% of the merged group.The scheme is conditional on AVN securityholder approval by at least 75% of the votes cast and 50% securityholders voting. Brett Blundy Retail Capital (BBRC) and the Aventus Board which represents 22.6% and 6.7% of AVN securities, respectively, intend to vote in favour of the merger. The scheme is also conditional on HDN unitholder approval by at least 50% of votes cast (HMC cannot vote). We think that recommended offer is attractive both in terms of historical multiples and share prices for Aventus securityholders. The merger is also FFO and NTA accretive to Aventus securityholders. While the merger is FFO accretive, it is NTA dilutive to HDN unitholders. Nevertheless, the strong strategic rationale for the merger should gain support from HDN unitholders. At the last close prices of Aventus and HDN, Aventus’ shares are trading at 3.6% gross spread to the indicative offer.

Aventus Recommended Merger with HomeCo Daily Needs REIT

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

Vicinity Centres / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/federation-centres" target="_blank" data-smartkarma-citation="entities:335:1" rel="noopener">Vicinity Centres (VCX AU)</a> aims to raise around US$800m (A$1.2bn) in order to shore up its balance sheet. The company has just announced that it won't pay any dividend for 2H20 (half year ending Jun 20), and that its portfolio valuation might be down 11-13%. While the placement itself is highly dilutive. However, the offer price is at multi-year lows and the stock appears to be already trading at a substantial discount to some of its peers.

Vicinity Centres (VCX AU) aims to raise around US$800m (A$1.2bn) in order to shore up its balance sheet. The company has just announced that it won't pay any dividend for 2H20 (half year ending Jun 20), and that its portfolio valuation might be down 11-13%. While the placement itself is highly dilutive. However, the offer price is at multi-year lows and the stock appears to be already trading at a substantial discount to some of its peers. 

Vicinity Centres Placement - Not Black and White but It Could Have Excess Stock

Australia

Region RE Limited operates as a real estate investment trust. The Company focuses on investments in shopping centre, liquor retailers, and discount department stores. Region RE serves customers in Australia.

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Region RE (RGN AU)

Ramsay Health Care (RHC AU): Indicative Proposal from KKR & Index Implications

A KKR led consortium has made a conditional, non-binding, indicative proposal to acquire 100% of Ramsay Health Care (RHC AU) at A$88/share in cash....

Brian Freitas

S&P/ASX200 - Ausnet OUT, Arena REIT IN

The S&P/ASX 200 will see Ausnet replaced by Arena REIT on 4 Feb. This is widely expected/predicted and Arena has outperformed, but it is a lot of...

Travis Lundy

HomeCo Daily Needs REIT (HDN AU) To Merge with Aventus (AVN AU) In Self-Takeunder

Home Daily Needs is merging with the larger Aventus under the HCM umbrella where AVN execs will take over HDN mgmt. This is OK, and will probably...

Travis Lundy

Aventus Recommended Merger with HomeCo Daily Needs REIT

The offer is attractive in terms of P/NTA and share prices for AVN. The merger is also FFO and NTA accretive to AVN. The strong strategic rationale...

Arun George

Vicinity Centres Placement - Not Black and White but It Could Have Excess Stock

Vicinity Centres (VCX AU) aims to raise around US$800m (A$1.2bn) in order to shore up its balance sheet. The company has just announced that it...

Sumeet Singh

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