Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

Mainstream Group Holdings Ltd / Event-Driven

<p>Australia-based third party fund administration services provider <a href="https://www.smartkarma.com/entities/mainstream-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:30611:1" rel="noopener">Mainstream Group Holdings Ltd (MAI AU)</a> has seen its share price increase by more than 120% in little over two months. </p><p>It all started when Hong Kong-headquartered Vistra launched a bid at A$1.20/share on 9th March 2021. Since then, multiple competitive bidders have got involved as described in my following insights. </p><table class="table table-striped"><tbody>
<tr>
<td style="width: 75px;"><h3>Date</h3></td>
<td colspan="2" style="width: 607px;"><h3>Insight Title</h3></td>
</tr>
<tr>
<td style="width: 75px;"><strong>9-Mar-21</strong></td>
<td colspan="2" style="width: 607px;"><strong><a href="https://www.smartkarma.com/insights/mainstream-group-mai-au-go-shop-provision-makes-it-interesting" target="_blank" data-smartkarma-citation="insights:48962" rel="noopener">Mainstream Group (MAI AU): Go-Shop Provision Makes It Interesting</a> </strong></td>
</tr>
<tr>
<td style="width: 75px;"></td>
<td colspan="2" style="width: 607px;">On 12th April, US-based financial technology company <a href="https://www.smartkarma.com/entities/ss-c-technologies-holdings" target="_blank" data-smartkarma-citation="entities:3464:1" rel="noopener">Ss&amp;C Technologies (SSNC US)</a> launched a competing bid at A$2.00/share (a 66.7% increase from Vistra's A$1.20). </td>
</tr>
<tr>
<td style="width: 75px;"><strong>15-Apr-21</strong></td>
<td colspan="2" style="width: 607px;"><strong><a href="https://www.smartkarma.com/insights/mainstream-mai-au-massive-overbid-by-ss-c-now-vistra-has-to-respond" target="_blank" data-smartkarma-citation="insights:50366" rel="noopener">Mainstream (MAI AU): Massive Overbid by SS&amp;C, Now Vistra Has to Respond</a> </strong></td>
</tr>
<tr>
<td style="width: 75px;"></td>
<td colspan="2" style="width: 607px;">MAI received a bid at A$2.20/share from an unidentified 3rd party party and SS&amp;C bumped their bid to A$2.25/share on 27th April 2021. </td>
</tr>
<tr>
<td style="width: 75px;"><strong>27-Apr-21</strong></td>
<td colspan="2" style="width: 607px;"><strong><a href="https://www.smartkarma.com/insights/mainstream-mai-au-more-competition-forces-ss-c-to-bump" target="_blank" data-smartkarma-citation="insights:50762" rel="noopener">Mainstream (MAI AU): More Competition Forces SS&amp;C to Bump</a> </strong></td>
</tr>
<tr>
<td style="width: 75px;"></td>
<td colspan="2" style="width: 607px;"><p>After the close on 28th April, Global Fund Administrator <a href="https://www.theapexgroup.com/" target="_blank" rel="noopener">Apex Group Limited</a> (Apex) launched a non-binding bid at A$2.35/share and MAI matched this bid. </p></td>
</tr>
<tr>
<td style="width: 75px;"><strong>29-Apr-21</strong></td>
<td colspan="2" style="width: 607px;"><strong><a href="https://www.smartkarma.com/insights/mainstream-mai-au-three-in-a-row-bullseye" target="_blank" data-smartkarma-citation="insights:50761" rel="noopener">Mainstream (MAI AU): Three-In-A-Row! Bullseye!</a></strong></td>
</tr>
<tr>
<td style="width: 75px;"></td>
<td colspan="2" style="width: 607px;"><p>Apex <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02369747-2A1295495?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">bumped</a> their bid to A$2.55/share on 30th April 2021. </p></td>
</tr>
<tr>
<td style="width: 75px;"><strong>2-May-21</strong></td>
<td colspan="2" style="width: 607px;"><p><strong><a href="https://www.smartkarma.com/insights/mainstream-mai-au-more-than-double-in-less-than-2-months-after-apex-bump" target="_blank" data-smartkarma-citation="insights:50950" rel="noopener">Mainstream (MAI AU): More-Than-Double in Less than 2 Months After Apex Bump</a>)  </strong></p></td>
</tr>
<tr>
<td style="width: 75px;"></td>
<td colspan="2" style="width: 607px;"><p>I turned Bearish on the situation claiming that "<em>as a Bump Option, this is not as attractive as the previous four instances</em>". MAI AU shares dipped from A$2.65 on May 2nd to A$2.56 on May 6th and SS&amp;C <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02372009-2A1296693?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">exercised their matching right</a> and raised their bid to A$2.56/share. </p></td>
</tr>
<tr>
<td style="width: 75px;"><strong>6-May-21</strong></td>
<td colspan="2" style="width: 607px;"><p><strong><a href="https://www.smartkarma.com/insights/mainstream-mai-au-bidding-war-continues-as-ss-c-overbids-for-the-4th-time" target="_blank" data-smartkarma-citation="insights:51146" rel="noopener">Mainstream (MAI AU): Bidding War Continues as SS&amp;C Overbids for the 4th Time</a> </strong></p></td>
</tr>
<tr>
<td style="width: 75px;"></td>
<td colspan="2"><p>Apex raised their bid to A$2.60/share. </p></td>
</tr>
<tr><td colspan="3" style="width: 75px;"><div class="content-remarks"><p style="text-align: center;"><em>The timing of these insights and the subsequent price movements are illustrated in the figure below where the green markers indicated Bullish insights and red markers indicate Bearish insights. </em></p></div></td></tr>
</tbody></table><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/206/148/original/Insight+Publications.png?1620959235" class="editor-image img-responsive" data-smartkarma-image-id="206148"></figure><div class="content-caption">Source: Smartkarma</div></section><p><strong>Today, SS&amp;C exercised their matching right and <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02374722-2A1298194?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">raised their bid</a> to A$2.61/share. </strong></p><div><p><em>More below the fold. </em></p></div><hr><div><div><div class="content-remarks"><p>For more information about M&amp;A rules, regulations, and practices in Australia, please refer to <a href="https://www.smartkarma.com/insights/quiddity-australia-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:30118" rel="noopener">Quiddity Australia M&amp;A Guide 2019</a> and <a href="https://www.smartkarma.com/insights/quiddity-m-a-australia-foreign-investment-reforms" target="_blank" data-smartkarma-citation="insights:40210" rel="noopener">Quiddity M&amp;A: Australia Foreign Investment Reforms</a></p></div></div></div>

Australia-based third party fund administration services provider Mainstream Group Holdings Ltd (MAI AU) has seen its share price increase by more than 120% in little over two months. It all started when Hong Kong-headquartered Vistra launched a bid at A$1.20/share on 9th March 2021. Since then, multiple competitive bidders have got involved as described in my following insights. 

Date
Insight Title


9-Mar-21
Mainstream Group (MAI AU): Go-Shop Provision Makes It Interesting 



On 12th April, US-based financial technology company Ss&amp;C Technologies (SSNC US) launched a competing bid at A$2.00/share (a 66.7% increase from Vistra's A$1.20). 


15-Apr-21
Mainstream (MAI AU): Massive Overbid by SS&amp;C, Now Vistra Has to Respond 



MAI received a bid at A$2.20/share from an unidentified 3rd party party and SS&amp;C bumped their bid to A$2.25/share on 27th April 2021. 


27-Apr-21
Mainstream (MAI AU): More Competition Forces SS&amp;C to Bump 



After the close on 28th April, Global Fund Administrator Apex Group Limited (Apex) launched a non-binding bid at A$2.35/share and MAI matched this bid. 


29-Apr-21
Mainstream (MAI AU): Three-In-A-Row! Bullseye!



Apex bumped their bid to A$2.55/share on 30th April 2021. 


2-May-21
Mainstream (MAI AU): More-Than-Double in Less than 2 Months After Apex Bump)  



I turned Bearish on the situation claiming that "as a Bump Option, this is not as attractive as the previous four instances". MAI AU shares dipped from A$2.65 on May 2nd to A$2.56 on May 6th and SS&amp;C exercised their matching right and raised their bid to A$2.56/share. 


6-May-21
Mainstream (MAI AU): Bidding War Continues as SS&amp;C Overbids for the 4th Time 



Apex raised their bid to A$2.60/share. 

The timing of these insights and the subsequent price movements are illustrated in the figure below where the green markers indicated Bullish insights and red markers indicate Bearish insights. 
Source: SmartkarmaToday, SS&amp;C exercised their matching right and raised their bid to A$2.61/share. More below the fold. For more information about M&amp;A rules, regulations, and practices in Australia, please refer to Quiddity Australia M&amp;A Guide 2019 and Quiddity M&amp;A: Australia Foreign Investment Reforms

Mainstream (MAI AU): +120% in ~2 Months but Bidding War Continues...

<p>A couple of months ago, on 9th March 2021, Australia-based third party fund administration services provider <a href="https://www.smartkarma.com/entities/mainstream-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:30611:1" rel="noopener">Mainstream Group Holdings Ltd (MAI AU)</a> received a bid from Hong Kong-headquartered Vistra at A$1.20/share. Since then multiple competing bidders including US-based financial technology firm <a href="https://www.smartkarma.com/entities/ss-c-technologies-holdings" target="_blank" data-smartkarma-citation="entities:3464:1" rel="noopener">SS&amp;C Technologies (SSNC US)</a> and Global Fund Administrator <a href="https://www.theapexgroup.com/" target="_blank" rel="noopener">Apex Group Limited</a> have gotten involved in a bidding war causing the Terms to more than double in less than 2 months.</p><p>Between 09th March and 29th April, I maintained a Bullish stance on the situation and saw MAI shares rise from A$1.23 to A$2.65 during that period. </p><table class="table table-striped"><tbody>
<tr>
<td style="width: 75.2px;"><h3>Date</h3></td>
<td colspan="2" style="width: 159.2px;"><h3>Insight Title</h3></td>
</tr>
<tr>
<td style="width: 75.2px;"><strong>9-Mar-21</strong></td>
<td colspan="2" style="width: 628.8px;"><strong><a href="https://www.smartkarma.com/insights/mainstream-group-mai-au-go-shop-provision-makes-it-interesting" target="_blank" data-smartkarma-citation="insights:48962" rel="noopener">Mainstream Group (MAI AU): Go-Shop Provision Makes It Interesting</a> </strong></td>
</tr>
<tr>
<td style="width: 75.2px;"></td>
<td colspan="2" style="width: 628.8px;"><em>On 12th April, US-based financial technology company <a href="https://www.smartkarma.com/entities/ss-c-technologies-holdings" target="_blank" data-smartkarma-citation="entities:3464:1" rel="noopener">Ss&amp;C Technologies (SSNC US)</a> launched a competing bid at A$2.00/share (a 66.7% increase from Vistra's A$1.20). </em></td>
</tr>
<tr>
<td style="width: 75.2px;"><strong>15-Apr-21</strong></td>
<td colspan="2" style="width: 628.8px;"><strong><a href="https://www.smartkarma.com/insights/mainstream-mai-au-massive-overbid-by-ss-c-now-vistra-has-to-respond" target="_blank" data-smartkarma-citation="insights:50366" rel="noopener">Mainstream (MAI AU): Massive Overbid by SS&amp;C, Now Vistra Has to Respond</a> </strong></td>
</tr>
<tr>
<td style="width: 75.2px;"></td>
<td colspan="2" style="width: 628.8px;"><em>MAI received a bid at A$2.20/share from an unidentified 3rd party party and SS&amp;C bumped their bid to A$2.25/share on 27th April 2021. </em></td>
</tr>
<tr>
<td style="width: 75.2px;"><strong>27-Apr-21</strong></td>
<td colspan="2" style="width: 628.8px;"><strong><a href="https://www.smartkarma.com/insights/mainstream-mai-au-more-competition-forces-ss-c-to-bump" target="_blank" data-smartkarma-citation="insights:50762" rel="noopener">Mainstream (MAI AU): More Competition Forces SS&amp;C to Bump</a> </strong></td>
</tr>
<tr>
<td style="width: 75.2px;"></td>
<td colspan="2" style="width: 628.8px;"><p><em>After the close on 28th April, Global Fund Administrator <a href="https://www.theapexgroup.com/" target="_blank" rel="noopener">Apex Group Limited</a> (Apex) launched a non-binding bid at A$2.35/share and MAI matched this bid.</em> </p></td>
</tr>
<tr>
<td style="width: 75.2px;"><strong>29-Apr-21</strong></td>
<td colspan="2" style="width: 628.8px;"><strong><a href="https://www.smartkarma.com/insights/mainstream-mai-au-three-in-a-row-bullseye" target="_blank" data-smartkarma-citation="insights:50761" rel="noopener">Mainstream (MAI AU): Three-In-A-Row! Bullseye!</a></strong></td>
</tr>
<tr>
<td style="width: 75.2px;"></td>
<td colspan="2" style="width: 628.8px;"><p><em>Apex <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02369747-2A1295495?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">bumped</a> their bid to A$2.55/share on 30th April 2021. </em></p></td>
</tr>
</tbody></table><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/204/630/original/Screenshot+2021-05-06+at+3.23.23+PM.png?1620285823" class="editor-image img-responsive" data-smartkarma-image-id="204630"></figure><p></p></section><p>On 2nd May, I turned Bearish on the situation claiming that "<em>as a Bump Option, this is not as attractive as the previous four instances</em>" (in <a href="https://www.smartkarma.com/insights/mainstream-mai-au-more-than-double-in-less-than-2-months-after-apex-bump" target="_blank" data-smartkarma-citation="insights:50950" rel="noopener">Mainstream (MAI AU): More-Than-Double in Less than 2 Months After Apex Bump</a>) and since then MAI shares have dipped from A$2.65 to A$2.56 (as of yesterday's close).   </p><p>Today, SS&amp;C <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02372009-2A1296693?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">exercised their matching right</a> and raised their bid to A$2.56/share. </p><div><p><em>More below the fold. </em></p></div><hr><div><div><div class="content-remarks"><p>For more information about M&amp;A rules, regulations, and practices in Australia, please refer to <a href="https://www.smartkarma.com/insights/quiddity-australia-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:30118" rel="noopener">Quiddity Australia M&amp;A Guide 2019</a> and <a href="https://www.smartkarma.com/insights/quiddity-m-a-australia-foreign-investment-reforms" target="_blank" data-smartkarma-citation="insights:40210" rel="noopener">Quiddity M&amp;A: Australia Foreign Investment Reforms</a></p></div></div></div>

A couple of months ago, on 9th March 2021, Australia-based third party fund administration services provider Mainstream Group Holdings Ltd (MAI AU) received a bid from Hong Kong-headquartered Vistra at A$1.20/share. Since then multiple competing bidders including US-based financial technology firm SS&amp;C Technologies (SSNC US) and Global Fund Administrator Apex Group Limited have gotten involved in a bidding war causing the Terms to more than double in less than 2 months.Between 09th March and 29th April, I maintained a Bullish stance on the situation and saw MAI shares rise from A$1.23 to A$2.65 during that period. 

Date
Insight Title


9-Mar-21
Mainstream Group (MAI AU): Go-Shop Provision Makes It Interesting 



On 12th April, US-based financial technology company Ss&amp;C Technologies (SSNC US) launched a competing bid at A$2.00/share (a 66.7% increase from Vistra's A$1.20). 


15-Apr-21
Mainstream (MAI AU): Massive Overbid by SS&amp;C, Now Vistra Has to Respond 



MAI received a bid at A$2.20/share from an unidentified 3rd party party and SS&amp;C bumped their bid to A$2.25/share on 27th April 2021. 


27-Apr-21
Mainstream (MAI AU): More Competition Forces SS&amp;C to Bump 



After the close on 28th April, Global Fund Administrator Apex Group Limited (Apex) launched a non-binding bid at A$2.35/share and MAI matched this bid. 


29-Apr-21
Mainstream (MAI AU): Three-In-A-Row! Bullseye!



Apex bumped their bid to A$2.55/share on 30th April 2021. 

On 2nd May, I turned Bearish on the situation claiming that "as a Bump Option, this is not as attractive as the previous four instances" (in Mainstream (MAI AU): More-Than-Double in Less than 2 Months After Apex Bump) and since then MAI shares have dipped from A$2.65 to A$2.56 (as of yesterday's close).   Today, SS&amp;C exercised their matching right and raised their bid to A$2.56/share. More below the fold. For more information about M&amp;A rules, regulations, and practices in Australia, please refer to Quiddity Australia M&amp;A Guide 2019 and Quiddity M&amp;A: Australia Foreign Investment Reforms

Mainstream (MAI AU): Bidding War Continues as SS&C Overbids for the 4th Time

<p>A couple of months ago, on 9th March 2021, Australia-based third party fund administration services provider <a href="https://www.smartkarma.com/entities/mainstream-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:30611:1" rel="noopener">Mainstream Group Holdings Ltd (MAI AU)</a> announced they had signed a Scheme Implementation Deed to be acquired by Hong Kong-headquartered Vistra in an all-cash deal that valued the company at a market cap of ~A$170mn. </p>
<p>The Offer Price was an all-time high for the stock and MAI major shareholders had agreed to vote in favour of the Transaction but there was a go-shop provision which made things interesting because MAI was a company that had achieved strong growth in Funds under Administration in the last few years especially in the US Private Equity Space.</p>
<p>In June 2020, MAI launched a key client’s unlisted managed fund (identified as Magellan's Australian subsidiary Airlie Australia Share Fund (AASF) in this <a href="https://www.proactiveinvestors.com.au/companies/news/926881/mainstream-group-holdings-continues-to-grow-revenue-reaching-554-million-for-fy20-926881.html" target="_blank" rel="noopener">news article</a>) quoted on the ASX under a new structure known as a "Quoted Fund". The fund was previously an <em>unquoted</em> fund and this move permitted investors to buy and sell units through their broker on the ASX alongside the fund’s existing traditional application and redemption process administered by Mainstream. According to the company, this represented the convergence of listed and unlisted open-ended funds into a single investment vehicle, allowing fund managers to offer investors both unlisted and exchange traded entry methods in a standard fund format. MAI claimed this to be an industry first initiative - a single system that handles listed and unlisted funds together, so the data source is one repository. </p>
<p>Vistra's Offer Price of A$1.20/share translated to an EV/EBITDA (June 21E) of 14.4x and when considering the projected EBITDA CAGR of 28%+ for the following two years, the Offer Price seemed light in my opinion and the situation seemed suitable for Bumpitrage.  </p>
<p><strong>Since then, I have maintained a Bullish stance on the situation and multiple competing bidders have gotten involved causing the Terms to more than double in less than 2 months. MAI shares have risen from A$1.23 to A$2.65 in that period. </strong></p>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 73px;">
<h3>Date</h3>
</td>
<td style="width: 154px;">
<h3>Insight Title</h3>
</td>
<td style="width: 434px;">
<h3>Outcome</h3>
</td>
</tr>
<tr>
<td style="width: 73px;">09-Mar-21</td>
<td style="width: 154px;">
<a href="https://www.smartkarma.com/insights/mainstream-group-mai-au-go-shop-provision-makes-it-interesting" target="_blank" data-smartkarma-citation="insights:48962" rel="noopener">Mainstream Group (MAI AU): Go-Shop Provision Makes It Interesting</a> </td>
<td style="width: 434px;">On 12th April, US-based financial technology company <a href="https://www.smartkarma.com/entities/ss-c-technologies-holdings" target="_blank" data-smartkarma-citation="entities:3464:1" rel="noopener">Ss&amp;C Technologies (SSNC US)</a> launched a competing bid at A$2.00/share (a 66.7% increase from Vistra's A$1.20). </td>
</tr>
<tr>
<td style="width: 73px;">15-Apr-21</td>
<td style="width: 154px;">
<a href="https://www.smartkarma.com/insights/mainstream-mai-au-massive-overbid-by-ss-c-now-vistra-has-to-respond" target="_blank" data-smartkarma-citation="insights:50366" rel="noopener">Mainstream (MAI AU): Massive Overbid by SS&amp;C, Now Vistra Has to Respond</a> </td>
<td style="width: 434px;">MAI received a bid at A$2.20/share from an unidentified 3rd party party and SS&amp;C bumped their bid to A$2.25/share on 27th April 2021. </td>
</tr>
<tr>
<td style="width: 73px;">27-Apr-21</td>
<td style="width: 154px;">
<a href="https://www.smartkarma.com/insights/mainstream-mai-au-more-competition-forces-ss-c-to-bump" target="_blank" data-smartkarma-citation="insights:50762" rel="noopener">Mainstream (MAI AU): More Competition Forces SS&amp;C to Bump</a> </td>
<td style="width: 434px;">After the close on 28th April, Global Fund Administrator <a href="https://www.theapexgroup.com/" target="_blank" rel="noopener">Apex Group Limited</a> (Apex) launched a non-binding bid at A$2.35/share and MAI matched this bid. </td>
</tr>
<tr>
<td style="width: 73px;">29-Apr-21</td>
<td style="width: 154px;">
<a href="https://www.smartkarma.com/insights/mainstream-mai-au-three-in-a-row-bullseye" target="_blank" data-smartkarma-citation="insights:50761" rel="noopener">Mainstream (MAI AU): Three-In-A-Row! Bullseye!</a> </td>
<td style="width: 434px;">
<p>Apex <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02369747-2A1295495?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">bumped</a> their bid to A$2.55/share on 30th April 2021.  </p>
<p></p>
</td>
</tr>
</tbody>
</table>
<p></p>
<p><em>More below the fold. </em></p>
<hr>
<div>
<div>
<div class="content-remarks">
<p>For more information about M&amp;A rules, regulations, and practices in Australia, please refer to <a href="https://www.smartkarma.com/insights/quiddity-australia-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:30118" rel="noopener">Quiddity Australia M&amp;A Guide 2019</a> and <a href="https://www.smartkarma.com/insights/quiddity-m-a-australia-foreign-investment-reforms" target="_blank" data-smartkarma-citation="insights:40210" rel="noopener">Quiddity M&amp;A: Australia Foreign Investment Reforms</a></p>
</div>
</div>
</div>

A couple of months ago, on 9th March 2021, Australia-based third party fund administration services provider Mainstream Group Holdings Ltd (MAI AU) announced they had signed a Scheme Implementation Deed to be acquired by Hong Kong-headquartered Vistra in an all-cash deal that valued the company at a market cap of ~A$170mn. 
The Offer Price was an all-time high for the stock and MAI major shareholders had agreed to vote in favour of the Transaction but there was a go-shop provision which made things interesting because MAI was a company that had achieved strong growth in Funds under Administration in the last few years especially in the US Private Equity Space.
In June 2020, MAI launched a key client’s unlisted managed fund (identified as Magellan's Australian subsidiary Airlie Australia Share Fund (AASF) in this news article) quoted on the ASX under a new structure known as a "Quoted Fund". The fund was previously an unquoted fund and this move permitted investors to buy and sell units through their broker on the ASX alongside the fund’s existing traditional application and redemption process administered by Mainstream. According to the company, this represented the convergence of listed and unlisted open-ended funds into a single investment vehicle, allowing fund managers to offer investors both unlisted and exchange traded entry methods in a standard fund format. MAI claimed this to be an industry first initiative - a single system that handles listed and unlisted funds together, so the data source is one repository. 
Vistra's Offer Price of A$1.20/share translated to an EV/EBITDA (June 21E) of 14.4x and when considering the projected EBITDA CAGR of 28%+ for the following two years, the Offer Price seemed light in my opinion and the situation seemed suitable for Bumpitrage.  
Since then, I have maintained a Bullish stance on the situation and multiple competing bidders have gotten involved causing the Terms to more than double in less than 2 months. MAI shares have risen from A$1.23 to A$2.65 in that period. 




Date


Insight Title


Outcome



09-Mar-21

Mainstream Group (MAI AU): Go-Shop Provision Makes It Interesting 
On 12th April, US-based financial technology company Ss&amp;C Technologies (SSNC US) launched a competing bid at A$2.00/share (a 66.7% increase from Vistra's A$1.20). 


15-Apr-21

Mainstream (MAI AU): Massive Overbid by SS&amp;C, Now Vistra Has to Respond 
MAI received a bid at A$2.20/share from an unidentified 3rd party party and SS&amp;C bumped their bid to A$2.25/share on 27th April 2021. 


27-Apr-21

Mainstream (MAI AU): More Competition Forces SS&amp;C to Bump 
After the close on 28th April, Global Fund Administrator Apex Group Limited (Apex) launched a non-binding bid at A$2.35/share and MAI matched this bid. 


29-Apr-21

Mainstream (MAI AU): Three-In-A-Row! Bullseye! 

Apex bumped their bid to A$2.55/share on 30th April 2021.  






More below the fold. 




For more information about M&amp;A rules, regulations, and practices in Australia, please refer to Quiddity Australia M&amp;A Guide 2019 and Quiddity M&amp;A: Australia Foreign Investment Reforms




Mainstream (MAI AU): More-Than-Double in Less than 2 Months After Apex Bump

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Last Week in Event SPACE:  Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

<div><p>On 9th March 2021, Australia-based third party fund administration services provider <a href="https://www.smartkarma.com/entities/mainstream-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:30611:1" rel="noopener">Mainstream Group Holdings Ltd (MAI AU)</a> announced they had signed a Scheme Implementation Deed to be acquired by Hong Kong-headquartered Vistra in an all-cash deal that valued the company at a market cap of ~A$170mn. The Offer Price was A$1.20/share which I felt was light on a growth-adjusted basis as I discussed in <a href="https://www.smartkarma.com/insights/mainstream-group-mai-au-go-shop-provision-makes-it-interesting" target="_blank" data-smartkarma-citation="insights:48962" rel="noopener">Mainstream Group (MAI AU): Go-Shop Provision Makes It Interesting</a>. </p></div><div><blockquote><p><strong>THE TRADE:</strong> I would get LONG at or below A$1.23 during the go-shop period. Since the fall to the undisturbed price is not very large and since the Offer Price appears light on a fundamental basis, I would be tempted to play 'Bumpitrage' during the go-shop period. (<a href="https://www.smartkarma.com/insights/mainstream-group-mai-au-go-shop-provision-makes-it-interesting" target="_blank" rel="noopener">written 9th Mar 2021</a>)</p></blockquote></div><div>
<h3>Hit 1</h3>
<p>Almost a month later, on 12th April 2021, MAI announced that they had received a superior bid from US-based financial technology company <a href="https://www.smartkarma.com/entities/ss-c-technologies-holdings" target="_blank" data-smartkarma-citation="entities:3464:1" rel="noopener">Ss&amp;C Technologies (SSNC US)</a> at an Offer Price of A$2.00/share which was 66.7% higher than Vistra's original bid of A$1.20.</p>
<h3>Hit 2</h3>
<p>In my follow-up insight, <a href="https://www.smartkarma.com/insights/mainstream-mai-au-massive-overbid-by-ss-c-now-vistra-has-to-respond" target="_blank" data-smartkarma-citation="insights:50366" rel="noopener">Mainstream (MAI AU): Massive Overbid by SS&amp;C, Now Vistra Has to Respond</a>, I continuing to be Bullish on the situation as I saw this as a "low-cost Bump option". MAI shares were at A$1.975 and I wrote "I would be long at or below the current trading price". A couple of days ago, on 27th April, 2021, MAI announced that SS&amp;C has bumped the Offer to A$2.25/share valuing the company at a market cap of ~U$250mn and I discussed this in <a href="https://www.smartkarma.com/insights/mainstream-mai-au-more-competition-forces-ss-c-to-bump" target="_blank" data-smartkarma-citation="insights:50762" rel="noopener">Mainstream (MAI AU): More Competition Forces SS&amp;C to Bump</a> reiterating my Bullish stance on the situation. </p>
<h3>Hit 3</h3>
<p>Today, MAI <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02368869-2A1295153?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> that SS&amp;C has revised Terms upwards again to A$2.35/share. </p>
<div><p><em>More below the fold. </em></p></div>
<hr>
<div><div><div class="content-remarks"><p>For more information about M&amp;A rules, regulations, and practices in Australia, please refer to <a href="https://www.smartkarma.com/insights/quiddity-australia-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:30118" rel="noopener">Quiddity Australia M&amp;A Guide 2019</a> and <a href="https://www.smartkarma.com/insights/quiddity-m-a-australia-foreign-investment-reforms" target="_blank" data-smartkarma-citation="insights:40210" rel="noopener">Quiddity M&amp;A: Australia Foreign Investment Reforms</a></p></div></div></div>
<div class="content-remarks"><p>  </p></div>
</div>

On 9th March 2021, Australia-based third party fund administration services provider Mainstream Group Holdings Ltd (MAI AU) announced they had signed a Scheme Implementation Deed to be acquired by Hong Kong-headquartered Vistra in an all-cash deal that valued the company at a market cap of ~A$170mn. The Offer Price was A$1.20/share which I felt was light on a growth-adjusted basis as I discussed in Mainstream Group (MAI AU): Go-Shop Provision Makes It Interesting. THE TRADE: I would get LONG at or below A$1.23 during the go-shop period. Since the fall to the undisturbed price is not very large and since the Offer Price appears light on a fundamental basis, I would be tempted to play 'Bumpitrage' during the go-shop period. (written 9th Mar 2021)
Hit 1
Almost a month later, on 12th April 2021, MAI announced that they had received a superior bid from US-based financial technology company Ss&amp;C Technologies (SSNC US) at an Offer Price of A$2.00/share which was 66.7% higher than Vistra's original bid of A$1.20.
Hit 2
In my follow-up insight, Mainstream (MAI AU): Massive Overbid by SS&amp;C, Now Vistra Has to Respond, I continuing to be Bullish on the situation as I saw this as a "low-cost Bump option". MAI shares were at A$1.975 and I wrote "I would be long at or below the current trading price". A couple of days ago, on 27th April, 2021, MAI announced that SS&amp;C has bumped the Offer to A$2.25/share valuing the company at a market cap of ~U$250mn and I discussed this in Mainstream (MAI AU): More Competition Forces SS&amp;C to Bump reiterating my Bullish stance on the situation. 
Hit 3
Today, MAI announced that SS&amp;C has revised Terms upwards again to A$2.35/share. 
More below the fold. 

For more information about M&amp;A rules, regulations, and practices in Australia, please refer to Quiddity Australia M&amp;A Guide 2019 and Quiddity M&amp;A: Australia Foreign Investment Reforms
  


Mainstream (MAI AU): Three-In-A-Row! Bullseye!

United States

SS&C Technologies Holdings, Inc. develops and markets computer software for financial services providers.  The software enables trading and modeling, portfolio management and reporting, accounting, performance measurement, reconciliation, reporting, processing, and clearing.

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SS&C Technologies (SSNC US)

Mainstream (MAI AU): +120% in ~2 Months but Bidding War Continues...

SS&C has matched/one-upped Apex bid, agreeing new terms at A$2.61. The stock is up 120% in 2mos and while the increments are small here, when...

Janaghan Jeyakumar, CFA

Mainstream (MAI AU): Bidding War Continues as SS&C Overbids for the 4th Time

Mainstream Group sees SS&C match the Apex overbid and bid up 1ct beyond. The market has reacted by sending the stock to A$2.60, expecting another...

Janaghan Jeyakumar, CFA

Mainstream (MAI AU): More-Than-Double in Less than 2 Months After Apex Bump

MAI AU gets a bump again as Apex overbids SS&C. While not a Scheme (SS&C has 4 days left to respond/match), it is a viable bidder, but now trading...

Janaghan Jeyakumar, CFA

Last Week in Event SPACE: Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

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

Mainstream (MAI AU): Three-In-A-Row! Bullseye!

Mainstream Group (MAI AU) bid is bumped again. That's three times now that SS&C has overbid. The story may not be over. Stay long.

Janaghan Jeyakumar, CFA

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