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

<ul>
<li>Net Protections Holdings (NPH), a buy now pay later service provider, aims to raise up to US$570m via selling a mix of primary and secondary shares in its Japan IPO.</li>
<li>As per Yano Research, it had 40% market share in the domestic BNPL market for B2C transactions.</li>
<li>In this note, we will talk about the positive and negative aspects of the deal</li>
</ul>


Net Protections Holdings (NPH), a buy now pay later service provider, aims to raise up to US$570m via selling a mix of primary and secondary shares in its Japan IPO.
As per Yano Research, it had 40% market share in the domestic BNPL market for B2C transactions.
In this note, we will talk about the positive and negative aspects of the deal


Net Protections Holdings IPO - Mixed Bag of Positives and Negatives

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.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> has despatched the scheme booklet in relation to the scheme of arrangement from <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a>. Square will offer a fixed exchange ratio of 0.375 Square shares per Afterpay share. Based on Square's closing price on 5 November, the implied transaction price of A$120.14 per share is a 24.3% premium to Afterpay’s share price of A$96.66 per share on the last trading date (30 July) and a 2.2% premium to Afterpay’s last close share price of A$117.50 per share.  </p><p>Unsurprisingly, the independent expert (IE) considers the offer to be fair and reasonable. The IE’s recommendation is based primarily on four valuation approaches – market approach, the income approach (DCF), listed market price and sell-side analyst price targets. We think that IE’s market approach and income approach could be improved. We think that listed market price and analyst price target valuation approaches are fair.  </p><p>Square shareholders approved the issuance of new Square shares in connection with the scheme on 3 November. Also, the transaction has gained US Department of Justice approval (waiting period under the HSR Act expired) and ACCC has confirmed it will not review the transaction (not a condition precedent). </p><p>The key condition is the scheme approved by the Afterpay shareholders. The scheme meeting is scheduled for 10 am on 6 December, the effective date is 10 December, the record date is 10 January 2022 and the implementation date is 18 January 2022. </p><div class="content-highlight"><p>We continue to think that offer is attractive in comparison to Afterpay's historical EV/Sales multiples and average share prices and will be approved by Afterpay shareholders. At last close prices, the gross spread is 2.2% and the annualised spread to the implementation date is 11.8%. </p></div>

Afterpay Touch (APT AU) has despatched the scheme booklet in relation to the scheme of arrangement from Square Inc (SQ US). Square will offer a fixed exchange ratio of 0.375 Square shares per Afterpay share. Based on Square's closing price on 5 November, the implied transaction price of A$120.14 per share is a 24.3% premium to Afterpay’s share price of A$96.66 per share on the last trading date (30 July) and a 2.2% premium to Afterpay’s last close share price of A$117.50 per share.  Unsurprisingly, the independent expert (IE) considers the offer to be fair and reasonable. The IE’s recommendation is based primarily on four valuation approaches – market approach, the income approach (DCF), listed market price and sell-side analyst price targets. We think that IE’s market approach and income approach could be improved. We think that listed market price and analyst price target valuation approaches are fair.  Square shareholders approved the issuance of new Square shares in connection with the scheme on 3 November. Also, the transaction has gained US Department of Justice approval (waiting period under the HSR Act expired) and ACCC has confirmed it will not review the transaction (not a condition precedent). The key condition is the scheme approved by the Afterpay shareholders. The scheme meeting is scheduled for 10 am on 6 December, the effective date is 10 December, the record date is 10 January 2022 and the implementation date is 18 January 2022. We continue to think that offer is attractive in comparison to Afterpay's historical EV/Sales multiples and average share prices and will be approved by Afterpay shareholders. At last close prices, the gross spread is 2.2% and the annualised spread to the implementation date is 11.8%. 

Afterpay Scheme Meeting on 6 Dec, IE Opinion

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<p>Back on the 2 August, <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a> and <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay (APT AU)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02402191-3A571915?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> a firm merger, the completion of which will create Australia's largest-ever buyout. Under the terms of the Offer, by way of a Scheme, Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay ordinary share. Based on Square’s closing price of US$247.26 on July 30, 2021, this represented an implied transaction price of ~A$126.21 per Afterpay share, or a premium of ~30.6%.</p>
<p>Yesterday Square's shareholders <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02447292-3A580232?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">approved</a> the issuance of Square shares for the acquisition of Afterpay.  This was shortly followed by the dispatch of the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02448085-3A580361?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">Scheme Booklet</a>.</p>
<p>The Scheme Meeting will be held on the 6 December with expected implementation on the 18 January. The Independent Expert reckons the Offer is fair and reasonable. </p>
<p>More below the fold.</p>
</div>


Back on the 2 August, Square Inc (SQ US) and Afterpay (APT AU) announced a firm merger, the completion of which will create Australia's largest-ever buyout. Under the terms of the Offer, by way of a Scheme, Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay ordinary share. Based on Square’s closing price of US$247.26 on July 30, 2021, this represented an implied transaction price of ~A$126.21 per Afterpay share, or a premium of ~30.6%.
Yesterday Square's shareholders approved the issuance of Square shares for the acquisition of Afterpay.  This was shortly followed by the dispatch of the Scheme Booklet.
The Scheme Meeting will be held on the 6 December with expected implementation on the 18 January. The Independent Expert reckons the Offer is fair and reasonable. 
More below the fold.


Afterpay Ltd (APT AU)/Square (SQ US) Merger: Scheme Meeting Convened

<p><a href="https://www.smartkarma.com/entities/finaccel-pte-ltd" target="_blank" data-smartkarma-citation="entities:33791:1" rel="noopener">FinAccel (1411023D SP)</a>, the parent of Kredivo, is the leading buy now, pay later (BNPL) platform in Indonesia with an e-commerce BPNL market share of around 40%-45%. Kredivo intends to go public in the US through a SPAC merger with VPC Impact Acquisition Holdings II.</p><p>The combined company will have an EV of $2.0 billion and an equity value of $2.5 billion at closing. The deal implies 6.3x 2022 EV/Sales based on Kredivo’s forecasted revenue. The transaction involves a 100% rollover by existing Kredivo shareholders, a $120 million fully committed PIPE (led by Marshall Wace, Corbin Capital, SV Investment, <a href="https://www.smartkarma.com/entities/palantir-technologies-inc" target="_blank" data-smartkarma-citation="entities:27728:1" rel="noopener">Palantir Technologies Inc (PLTR US)</a>, Maso Capital, and sponsor Victory Park Capital) in addition to a $55 million convertible note funded by existing investors <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> and Square Peg. Kredivo is expected to receive over $430 million of gross proceeds. Existing shareholders will have an 83% ownership of the combined company including the concurrent investment. </p><p>The BNPL market is rapidly becoming a must-have product for payment providers. This necessity has spurred the launch of in-house solutions from global payment providers such as <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US)</a> as well the M&amp;A as evidenced by <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a>'s bid for <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a>.  </p><div class="content-highlight"><p>Since its launch in 2016, Kredivo has established itself as a leading BNPL player in Indonesia due to sustainable competitive advantages built around an in-house credit bureau and low customer acquisition costs. Kredivo is not resting on its laurels but increasing its addressable market through international expansion in adjacent countries and the launch of a new business line (Lime). Kredivo is using its market-leading position to deliver high growth with a declining loss margin. Refreshingly the YTD performance suggests that management are well on track to meet their forecasts. Finally, the proposed valuation is also attractive in comparison to global BNPL peers. </p></div>

FinAccel (1411023D SP), the parent of Kredivo, is the leading buy now, pay later (BNPL) platform in Indonesia with an e-commerce BPNL market share of around 40%-45%. Kredivo intends to go public in the US through a SPAC merger with VPC Impact Acquisition Holdings II.The combined company will have an EV of $2.0 billion and an equity value of $2.5 billion at closing. The deal implies 6.3x 2022 EV/Sales based on Kredivo’s forecasted revenue. The transaction involves a 100% rollover by existing Kredivo shareholders, a $120 million fully committed PIPE (led by Marshall Wace, Corbin Capital, SV Investment, Palantir Technologies Inc (PLTR US), Maso Capital, and sponsor Victory Park Capital) in addition to a $55 million convertible note funded by existing investors Naver Corp (035420 KS) and Square Peg. Kredivo is expected to receive over $430 million of gross proceeds. Existing shareholders will have an 83% ownership of the combined company including the concurrent investment. The BNPL market is rapidly becoming a must-have product for payment providers. This necessity has spurred the launch of in-house solutions from global payment providers such as Paypal Holdings (PYPL US) as well the M&amp;A as evidenced by Square Inc (SQ US)'s bid for Afterpay Touch (APT AU).  Since its launch in 2016, Kredivo has established itself as a leading BNPL player in Indonesia due to sustainable competitive advantages built around an in-house credit bureau and low customer acquisition costs. Kredivo is not resting on its laurels but increasing its addressable market through international expansion in adjacent countries and the launch of a new business line (Lime). Kredivo is using its market-leading position to deliver high growth with a declining loss margin. Refreshingly the YTD performance suggests that management are well on track to meet their forecasts. Finally, the proposed valuation is also attractive in comparison to global BNPL peers. 

FinAccel/Kredivo SPAC Deal: Smooth Shopping

<p><a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> is a leading buy now, pay later (BNPL) player. Afterpay revealed that <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a> had agreed to acquire it through a recommended scheme of arrangement. Square will offer a fixed exchange ratio of 0.375 Square shares per Afterpay share. Based on Square's closing price on 30 July, the implied transaction price of A$126.21 per share is a 30.6% premium to the share price of A$96.66 per share on the last trading date (30 July). The deal has an implied value of A$39 billion and if completed, would be the largest in Australian M&amp;A history. </p><p>The completion conditions include Afterpay and Square shareholder approval along with regulatory approval. Square intends to also establish a secondary listing on ASX. Afterpay shareholders will own 18.5% of the combined company on a fully diluted basis.</p><div class="content-highlight"><p>While the share price has traded recently above the implied offer price, we think that offer is attractive in comparison to historical EV/Sales multiples and average share prices. With BNPL competition steadily increasing, the all-scrip deal gives shareholders the opportunity to benefit from the ability of the combined Square + Afterpay to expand the customer base and strengthen the product portfolio. At Square's current price of US$274.93 at the time of writing (+11% on Friday close), Afterpay shares are trading at a 22% gross spread to the indicative offer.</p></div>

Afterpay Touch (APT AU) is a leading buy now, pay later (BNPL) player. Afterpay revealed that Square Inc (SQ US) had agreed to acquire it through a recommended scheme of arrangement. Square will offer a fixed exchange ratio of 0.375 Square shares per Afterpay share. Based on Square's closing price on 30 July, the implied transaction price of A$126.21 per share is a 30.6% premium to the share price of A$96.66 per share on the last trading date (30 July). The deal has an implied value of A$39 billion and if completed, would be the largest in Australian M&amp;A history. The completion conditions include Afterpay and Square shareholder approval along with regulatory approval. Square intends to also establish a secondary listing on ASX. Afterpay shareholders will own 18.5% of the combined company on a fully diluted basis.While the share price has traded recently above the implied offer price, we think that offer is attractive in comparison to historical EV/Sales multiples and average share prices. With BNPL competition steadily increasing, the all-scrip deal gives shareholders the opportunity to benefit from the ability of the combined Square + Afterpay to expand the customer base and strengthen the product portfolio. At Square's current price of US$274.93 at the time of writing (+11% on Friday close), Afterpay shares are trading at a 22% gross spread to the indicative offer.

Square Lobs a Market-Defining Bid for Afterpay

Australia

Zip Co Limited provides point-of-sale credit and digital payment services. The Company offers retail finance solutions to small, medium, and enterprise businesses. Zip Co serves retail, education, health, and travel industries in Australia.

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Zip (ZIP AU)

Net Protections Holdings IPO - Mixed Bag of Positives and Negatives

Net Protections Holdings (NPH), a buy now pay later service provider, aims to raise up to US$570m via selling a mix of primary and secondary shares...

Sumeet Singh

Afterpay Scheme Meeting on 6 Dec, IE Opinion

The scheme meeting is scheduled for 10 am on 6 December and the implementation date is 18 January 2022. The scheme will be likely approved. Gross...

Arun George

Afterpay Ltd (APT AU)/Square (SQ US) Merger: Scheme Meeting Convened

Trading at a gross/annualised spread of 4.1%/22%. Get involved. The key competitor, Affirm, is up 160% since the transaction was announced. I still...

David Blennerhassett

FinAccel/Kredivo SPAC Deal: Smooth Shopping

Kredivo is using its market-leading BNPL position to deliver high growth with a declining loss margin. Refreshingly the forecasts are reasonable...

Arun George

Square Lobs a Market-Defining Bid for Afterpay

Afterpay revealed that Square had agreed to acquire it through a recommended scheme of arrangement. We think that the all-scrip offer is attractive...

Arun George

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