Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<ul>
<li>The declining appeal of the separator business prompts SK to seek buyers for SKIET through block deals amid financial pressures. The first deal is anticipated despite recent stock price drops.</li>
<li>SK Ecoplant looks to sell its 37.6% stake in SK Oceanplant. Negotiations stall over the former major shareholder's 20% stake, prompting consideration of a block deal.</li>
<li>SK Bioscience, under SK Discovery, faces possible sale amid SK's bio company reshuffle. SK Chemicals may bring SK Biopharm under its wing to help SK Inc focus on semiconductors/batteries.</li>
</ul>


The declining appeal of the separator business prompts SK to seek buyers for SKIET through block deals amid financial pressures. The first deal is anticipated despite recent stock price drops.
SK Ecoplant looks to sell its 37.6% stake in SK Oceanplant. Negotiations stall over the former major shareholder's 20% stake, prompting consideration of a block deal.
SK Bioscience, under SK Discovery, faces possible sale amid SK's bio company reshuffle. SK Chemicals may bring SK Biopharm under its wing to help SK Inc focus on semiconductors/batteries.


Block Deal Prospects Arising from SK Group's Corporate Reshuffle

Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

Equity Bottom-Up

<ul><li>Indian smartphone exports boosted by iPhone makers as Xiphera introduces quantum security improvements in crypto solutions</li><li>Ola Electric pioneers solid-state batteries for electric vehicles, while SK Hynix invests $75 billion to dominate HBM Market for AI Chips</li><li>China nationalizes rare earth resources as airlines struggle with high costs to achieve sustainable fuel goals, Foxconn denies mistreating married women in India</li></ul>

Indian smartphone exports boosted by iPhone makers as Xiphera introduces quantum security improvements in crypto solutionsOla Electric pioneers solid-state batteries for electric vehicles, while SK Hynix invests $75 billion to dominate HBM Market for AI ChipsChina nationalizes rare earth resources as airlines struggle with high costs to achieve sustainable fuel goals, Foxconn denies mistreating married women in India

Tech Supply Chain Tracker (02-Jul-2024): India boosts smartphone exports with iPhone manufacturers.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

<ul>
<li>In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 3Q 2024.</li>
<li>Of the 38 pair trades, 21 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.</li>
<li>These pairs could generate trading opportunities in terms of their pricing gaps closing reversal (Doosan Corp vs. Doosan Enerbility; Hyundai Mobis vs Hyundai Motor).</li>
</ul>


In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 3Q 2024.
Of the 38 pair trades, 21 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.
These pairs could generate trading opportunities in terms of their pricing gaps closing reversal (Doosan Corp vs. Doosan Enerbility; Hyundai Mobis vs Hyundai Motor).


Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2024

<ul>
<li>SK Square's market cap exceeds SK Networks' by over 10 times, qualifying this merger as small-scale. Thus, only SK Networks needs shareholder approval and grants appraisal rights solely to shareholders.</li>
<li>The current arbitrage spread for SK Networks' appraisal rights is 1.95%, and for the swap, it's 4.16%. These are nominal values excluding trading costs and taxes.</li>
<li>Today's SK Square and SK Networks prices reflect arbitrage spreads. Yesterday's 8% spread widened, focusing on narrowing appraisal rights and swap spreads, essential before next week's announcement.</li>
</ul>


SK Square's market cap exceeds SK Networks' by over 10 times, qualifying this merger as small-scale. Thus, only SK Networks needs shareholder approval and grants appraisal rights solely to shareholders.
The current arbitrage spread for SK Networks' appraisal rights is 1.95%, and for the swap, it's 4.16%. These are nominal values excluding trading costs and taxes.
Today's SK Square and SK Networks prices reflect arbitrage spreads. Yesterday's 8% spread widened, focusing on narrowing appraisal rights and swap spreads, essential before next week's announcement.


SK Square + SK Networks Merger Swap: A Guide to Pre-Merger Arb Spread Calculations

<ul>
<li>Starting 24 July, there will be a mandatory pre-announcement requirement for block deal sales in Korea. </li>
<li>In other words, the major shareholders of the Korean companies need to report publicly prior to their actual sales of their stakes in these companies through block deal sales.</li>
<li>The potential block deal sales candidates could continue to underperform on average the companies that are selling these stocks in potential block deal sales in the next several weeks. </li>
</ul>


Starting 24 July, there will be a mandatory pre-announcement requirement for block deal sales in Korea. 
In other words, the major shareholders of the Korean companies need to report publicly prior to their actual sales of their stakes in these companies through block deal sales.
The potential block deal sales candidates could continue to underperform on average the companies that are selling these stocks in potential block deal sales in the next several weeks. 


Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals

South Korea

SK Holdings Co., Ltd. is a holdings company that is engaged in various industries including energy, chemicals, information technology, semiconductors, marketing, and services businesses in South Korea and internationally.

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SK Inc (034730 KS)

Block Deal Prospects Arising from SK Group's Corporate Reshuffle

SK Group seems to have chosen a block deal of SK Innovation's stake in SKIET as the first step to improve SK On's financial structure. SK...

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Tech Supply Chain Tracker (02-Jul-2024): India boosts smartphone exports with iPhone manufacturers.

India's smartphone exports increase thanks to iPhone makers, Xiphera advances quantum security, Ola Electric leads in solid-state batteries, SK...

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Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2024

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in...

Douglas Kim

SK Square + SK Networks Merger Swap: A Guide to Pre-Merger Arb Spread Calculations

This post is a guide to pre-merger arb trading setups for merger swap events in the Korean local market, considering this potential merger...

Sanghyun Park

Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals

According to Seoul Economic Daily, LG Chem has been tapping various institutional investors for a potential block deal sale of about 1 trillion won...

Douglas Kim

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