Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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Back on the 17 May, after ARA Asset Management <a href="https://ara.listedcompany.com/newsroom/ARAPress_Release_SMBC0Joins-ARAasStrategicShareholder_17052021.pdf" target="_blank" rel="noopener">announced</a> a $500mn round of equity financing from Sumitomo Mitsui Banking Corporation, I reiterated a BUY on <a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> in <a href="https://skr.ma/TcDY5" target="_blank" rel="noopener">Straits Trading: ARA's Pre-IPO Funding From SMBC</a>.
Based on the <a href="https://ara.listedcompany.com/misc/circulars/ARA-Scheme_Document_FINAL.pdf" target="_blank" rel="noopener">Scheme</a> value of ARA in 2017 when it was taken private, and its then-AUM, ARA was potentially worth upwards of S$6bn. This in turn assigned a value of S$1.3bn for STR's stake in ARA, ~30% above its then-current market cap.
That was pretty close to the mark.
As discussed in <a href="https://skr.ma/fJECF" target="_blank" rel="noopener">ESR Cayman (1821 HK) Takes Out ARA Asset Management</a>, <a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> has now all but sealed the takeover of ARA in a US$5.2bn deal.
For its part, STR will pocket US$845.3mn (S$1.14bn) - in cash &amp; ESR scrip - from the transaction.
STR's shares have gained 13% as I type. 
More below the fold. 
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Back on the 17 May, after ARA Asset Management announced a $500mn round of equity financing from Sumitomo Mitsui Banking Corporation, I reiterated a BUY on Straits Trading (STRTR SP) in Straits Trading: ARA's Pre-IPO Funding From SMBC.
Based on the Scheme value of ARA in 2017 when it was taken private, and its then-AUM, ARA was potentially worth upwards of S$6bn. This in turn assigned a value of S$1.3bn for STR's stake in ARA, ~30% above its then-current market cap.
That was pretty close to the mark.
As discussed in ESR Cayman (1821 HK) Takes Out ARA Asset Management, ESR Cayman (1821 HK) has now all but sealed the takeover of ARA in a US$5.2bn deal.
For its part, STR will pocket US$845.3mn (S$1.14bn) - in cash &amp; ESR scrip - from the transaction.
STR's shares have gained 13% as I type. 
More below the fold. 


Straits Trading Cheap As ARA Asset Exposure Monetized

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<li>Back in February this year, various media sources reported that the key shareholders of warehouse/fund management play <a href="https://www.smartkarma.com/entities/esr-group-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Group (1821 HK)</a>, were exploring options, including a privatisation.</li>
<li>Long-Term holders Warburg Pincus and Canadian pension fund OMERS hold 14% and 10.7% respectively. ESR co-founders/directors Jeffrey Shen, Stuart Gibson, Charles de Portes, and Hwee Chiang collectively hold another ~23%.</li>
<li>Shares in ESR were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0513/2024051300060.pdf" target="_blank" rel="noopener">suspended</a> this morning "pursuant to the Hong Kong Code on Takeovers and Mergers".</li>
</ul>


Back in February this year, various media sources reported that the key shareholders of warehouse/fund management play ESR Group (1821 HK), were exploring options, including a privatisation.
Long-Term holders Warburg Pincus and Canadian pension fund OMERS hold 14% and 10.7% respectively. ESR co-founders/directors Jeffrey Shen, Stuart Gibson, Charles de Portes, and Hwee Chiang collectively hold another ~23%.
Shares in ESR were suspended this morning "pursuant to the Hong Kong Code on Takeovers and Mergers".


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.

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<li>
<a href="https://www.smartkarma.com/entities/esr-group-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Group (1821 HK)</a>’s preconditional scheme offer from the consortium is either cash (HK$13.00), scrip or a combination of cash/scrip. The offer is final.</li>
<li>On 7 March, the consortium disclosed two additional irrevocable (3.47% of outstanding shares) and satisfied two regulatory preconditions (UK FCA and Singapore MAS).</li>
<li>Since announcing the offer, peers have materially derated, lowering the vote risk. At the last close and for an end August payment, the gross/annualised spread is 4.5%/10.1%</li>
</ul>



ESR Group (1821 HK)’s preconditional scheme offer from the consortium is either cash (HK$13.00), scrip or a combination of cash/scrip. The offer is final.
On 7 March, the consortium disclosed two additional irrevocable (3.47% of outstanding shares) and satisfied two regulatory preconditions (UK FCA and Singapore MAS).
Since announcing the offer, peers have materially derated, lowering the vote risk. At the last close and for an end August payment, the gross/annualised spread is 4.5%/10.1%


<ul>
<li>When the Starwood/Warburg Pincus Consortium announced a firm offer on the 4th December, it was pre-conditional on a raft of regulatory approvals from no less than eight countries/jurisdictions. </li>
<li>We're half way there, with four approvals now squared away, leaving Australia, China, Hong Kong and New Zealand still to give the go ahead. </li>
<li>Irrevocables comprising 34.26% of the register (and 57.01% of disinterested shares) are now in the bag. This is a done deal. It's just a question of timing.</li>
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When the Starwood/Warburg Pincus Consortium announced a firm offer on the 4th December, it was pre-conditional on a raft of regulatory approvals from no less than eight countries/jurisdictions. 
We're half way there, with four approvals now squared away, leaving Australia, China, Hong Kong and New Zealand still to give the go ahead. 
Irrevocables comprising 34.26% of the register (and 57.01% of disinterested shares) are now in the bag. This is a done deal. It's just a question of timing.


<ul>
<li>
HK$13.00/Share (deemed final). That's the key takeaway here as the Starwood/Warburg Pincus Consortium (finally) tables a firm offer, by way of a pre-conditional Scheme.</li>
<li>Pre-Conditions are extensive, with a long stop date of the 4th September 2025.</li>
<li>HK$13.00 is below prior expectations of a HK$14+ handle. But with irrevocables of 30.79% of the register (and 51.24% of Scheme shares), this is done. A scrip option is afforded.</li>
</ul>



HK$13.00/Share (deemed final). That's the key takeaway here as the Starwood/Warburg Pincus Consortium (finally) tables a firm offer, by way of a pre-conditional Scheme.
Pre-Conditions are extensive, with a long stop date of the 4th September 2025.
HK$13.00 is below prior expectations of a HK$14+ handle. But with irrevocables of 30.79% of the register (and 51.24% of Scheme shares), this is done. A scrip option is afforded.


Singapore

Straits Trading Company Limited operates as an investment holding company that positions its investments in real estate, hospitality, resources and other investments in the Asia Pacific region. The Company is also engaged in tin mining and smelting through its subsidiary.

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Straits Trading (STRTR SP)

Straits Trading Cheap As ARA Asset Exposure Monetized

After my insight - Ripe For Privatisation - in October 2020, Straits Trading nicely gained ~130% over 12 months. STR then realised a ~S$685.6mn...

David Blennerhassett

ESR Group (1821 HK): Offer Musings

As it expands throughout the region, it is arguable ESR has been unfairly penalised by HKEx's protracted bear run. A move away from the HKEx does...

David Blennerhassett

ESR Group (1821 HK): Steady Progress

The additional irrevocable and material derating of peers lowers the vote risk. The consortium is making steady progress in satisfying the...

Arun George

ESR (1821 HK) Chips Away At Pre-Cons

Four of the eight key pre-conditions are now in the bag. And irrevocable undertakings have also been bolstered. This is a done deal. It’s just a...

David Blennerhassett

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52-week Range

Market Cap (USDm)

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Dividend (Yield)

Straits Trading Cheap As ARA Asset Exposure Monetized

After my insight - Ripe For Privatisation - in October 2020, Straits Trading nicely gained ~130% over 12 months. STR then realised a ~S$685.6mn...

David Blennerhassett

ESR Group (1821 HK): Offer Musings

As it expands throughout the region, it is arguable ESR has been unfairly penalised by HKEx's protracted bear run. A move away from the HKEx does...

David Blennerhassett

ESR Group (1821 HK): Steady Progress

The additional irrevocable and material derating of peers lowers the vote risk. The consortium is making steady progress in satisfying the...

Arun George

ESR (1821 HK) Chips Away At Pre-Cons

Four of the eight key pre-conditions are now in the bag. And irrevocable undertakings have also been bolstered. This is a done deal. It’s just a...

David Blennerhassett

ESR (1821 HK): HK$13.00/Share Offer

This is a done. Assuming early August completion - or eight months out - I'd pay ~HK$11.85/share for a 15% annualised return; up to HK$12/share if...

David Blennerhassett