Event-Driven

China Huarong Asset Management (2799 HK) has announced the full conversion of 8.358bn Domestic Shares to H-shares. The increased float could help the stock get added to the MSCI/FTSE indices.
Depending on when the conversion is completed, the stock could be added to the MSCI China Index at the February QCIR though inclusion in May is more likely.
There is a high probability of inclusion in the FTSE indices at the March SAIR – though it remains to be seen if that’s to the All-World or All-Cap Index.

SET50 Index Rebalance Preview: Four Potential Changes in December

The market cap review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) ends in 6 trading days.
Following the market consultation and reduction in the turnover ratio, there could be four changes to the index. The DTAC/TRUE merger could result in another inclusion in Q1 2023.
Estimated one-way turnover at the December rebalance is 8.1% and will result in a one-way trade of THB 7.4bn. More than 1x ADV to trade on most stocks.

Link Admin Is Cheap Amid PEXA In-Specie And Possible BCM/CM Sale

Link Administration (LNK AU) has released the explanatory memorandum regarding the PEXA Group (PXA AU) in-specie distribution.
Link shareholders will receive one PEXA share for every 7.52 Link shares. Shareholders will vote on the distribution on the 23 December. The IE, rightfully, deemed the process fair.
If D&D buys Link’s BCM/CM ops for A$1.27bn, Link would be net cash of ~A$1.40/share versus an ex-entitlement price of ~A$1.58/share. And Link would still hold the lucrative RSS ops.

DTAC/True Merger to Proceed but Without the VTOs

Telenor and CP Group will proceed with the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger but without the VTO due to missing the VTO conditions precedent deadline.
The likely real reason for the VTO cancellation was the realisation that the VTO prices were too generous, particularly in the context of the NBTC’s harsh conditions.
Completion is targeted for 1Q23. The current share price ratio of 8.750x vs the exchange ratio of 10.221x is attractive. Timing and potential tweaks to the exchange ratio are risks.

KOSPI 200 Rebalance in 1H 2023 – Five Potential Additions Post Deletions of Meritz Affiliates

Meritz Financial Group’s decision to delist Meritz Fire & Marine Insurance and Meritz Securities in 1H 2023 will result in at least two new additions to KOSPI 200.
We highlight five companies which could be potential additions to KOSPI 200 in 1H 2023.
Five potential additions to KOSPI 200 in 1H 2023 include Jb Financial Group, Hyundai Construction Equipment, Dentium, Samyang Foods, and Lotte Rental.

Pendal (PDL AU)/Perpetual (PPT AU) Scheme Meeting on 23 December

The IE considers Perpetual Ltd (PPT AU)‘s cash and scrip offer for Pendal Group (PDL AU) to be fair and reasonable as it is within its valuation range of A$4.87-5.71.
Perpetual shareholders are getting the short end of the stick. While possible, Regal Partners (RPL AU)/BPEA EQT riding to the rescue of Perpetual shareholders is low.
Pendal shareholders, who are the net beneficiaries, will be supportive of the offer. At the last close prices, the gross spread to the offer is 11.3%.

GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO

In Mar 2022, GoTo raised around US$1bn from what was essentially a domestic Indonesian IPO. Its pre-IPO shareholders will be released from their lockup soon.
GoTo was formed in May 2021 as a result of a merger between two of Indonesia’s largest unicorns Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
In this note, we will talk about the upcoming lockup expiry.

EQD | SX7E (SX7E Index): Relative Value Vol Trade Vs SX5E Index

By Simon Harris

SX7E spot has rallied and vols have sold off significantly
The spread between the sector and SX5E Index has converged and there are still many reasons to expect volatility in banking stocks into next year
Trade a 6M relative value vol spread to take advantage of the recent vol compression

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Nov 22

Daily Brief Event-Driven: FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: 46% One-Way Turnover and US$5bn Two-Way Trade and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: 46% One-Way Turnover and US$5bn Two-Way Trade
FTSE TWSE Dividend+ Dec 22 Quiddity Final Expectations: Crucial Shift in Tracking AUM a GAME CHANGER
FTSE TWSE Taiwan 50 Index Rebalance Preview: Far Eastern Could Replace AUO
Meritz Merger Event: Swap Conditions, Spread Arb Trade, & K200 Flow Implementation
Medley (4480) – Move to Prime Means TOPIX Inclusion Next Month
AXXZIA (4936 JP) – TOPIX Inclusion Is Likely In February
FTSE TWSE 50 & 100 Dec 22 Final Expectations: Greatek Is Still the Main Talking Point
Meritz Financial Group: Comprehensive Stock Swap + Delisting of Meritz Sec. And Meritz F&M Insurance
Lifestyle (1212 HK)’s Scheme Gets Up
FTSE China 50 Index Rebalance Preview: JD Health Could Replace Xpeng

FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: 46% One-Way Turnover and US$5bn Two-Way Trade

Today is the review cutoff for dividend data and stock prices that will be used to select the inclusions and exclusions as well as for capping of index weights.
We see 26 adds and 5 deletes for the index at the December rebalance resulting in one-way turnover of 46% and a one-way trade of TWD 78.1bn (US$2.51bn).
Passive trackers will need to buy over 5 days of ADV on 15 stocks and sell over 5 days of ADV on 19 stocks and this will present trading opportunities.

FTSE TWSE Dividend+ Dec 22 Quiddity Final Expectations: Crucial Shift in Tracking AUM a GAME CHANGER

By Janaghan Jeyakumar, CFA

In October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50 during the December 2022 Rebalance.
Considering the combined effect of expected index changes and capping flows, there could be 27 potential inflows names and 28 potential outflow names with total one-way flow size of US$2.45bn.
There are multiple names on both sides with several days of volume to trade.

FTSE TWSE Taiwan 50 Index Rebalance Preview: Far Eastern Could Replace AUO

Today is the review cutoff and we expect Far Eastern New Century (1402 TT) to replace AU Optronics (2409 TT) in the FTSE TWSE Taiwan 50 Index in December.
Passive Taiwan 50 trackers will need to buy nearly 6 days ADV on Far Eastern New Century (1402 TT) and sell 1.6 days of ADV on AU Optronics (2409 TT).
There will be same way flows from the FTSE TWSE Taiwan Dividend+ Index trackers and will substantially add to the impact on the stocks.

Meritz Merger Event: Swap Conditions, Spread Arb Trade, & K200 Flow Implementation

The last trading day to secure appraisal rights is today (the 22nd). You must buy stocks by today to make arb trade possible using appraisal rights.
We should consider LONG FINANCIAL SHORT FIRE/SECURITIES. KSD allows us to maintain borrowed stocks of the target company without redemption procedures if new stocks are listed after the merger.
K200 trackers will have to buy in for FIRE at the close on January 27, whereas SECURITIES will be on March 31. We should design a setup targeting this preemptively.

Medley (4480) – Move to Prime Means TOPIX Inclusion Next Month

A year ago, TSE Growth-listed Medley (4480 JP) said they would “make preparations” for a listing on TSE Prime. Last month, Janaghan Jeyakumar, CFA had it at “Almost Ready.”
Today they announced they would list on TSE Prime on 28 November which means a TOPIX Inclusion at end-December.
Shareholder structure and stock bias matter a lot in this case. It’s very much worth looking at the details.

AXXZIA (4936 JP) – TOPIX Inclusion Is Likely In February

Just under two weeks ago, AXXZIA Inc (4936 JP) announced it had on that day (9 November) applied to move to TSE Prime from TSE Growth.
It’s an interesting one because of the strange differential between “tradable shares” and “float.”
After some study, I think this could be a TOPIX inclusion at end-Feb 2023, but there are steps to take between now and then.

FTSE TWSE 50 & 100 Dec 22 Final Expectations: Greatek Is Still the Main Talking Point

By Janaghan Jeyakumar, CFA

The base date for the December 2022 index review FTSE TWSE Taiwan 50 and Taiwan Mid-Cap 100 for the December 2022 Rebalance is today (21st November 2022).
In this insight, we take a look at Quiddity’s final predictions for expected ADDs/DELs for the December 2022 index review.
I expect one change for the Taiwan 50 Index and one change for the Taiwan Mid-Cap 100 index.

Meritz Financial Group: Comprehensive Stock Swap + Delisting of Meritz Sec. And Meritz F&M Insurance

After the market close today, Meritz Financial Group (MFG) made one of the biggest announcements in the history of the group.
It announced that Meritz Fire & Marine Insurance and Meritz Securities will become fully owned subsidiaries of Meritz Financial Group. Meritz F&M Insurance and Meritz Securities will also be delisted.
MFG is making a real positive change through the share swaps among the three companies. This will likely have the biggest positive impact will be on MFG.

Lifestyle (1212 HK)’s Scheme Gets Up

Independent shareholders of Lifestyle International Holdings (1212 HK) comfortably voted through the Scheme resolution.
94.93% of stakeholders present (and via proxy) voted FOR, with 5.07% voting AGAINST.
The last day of trading is the 6 December with payment expected on or before the 30 December.

FTSE China 50 Index Rebalance Preview: JD Health Could Replace Xpeng

At the end of the review period for the December rebalance, we see JD Health (6618 HK) replacing XPeng (9868 HK) in the FTSE China 50 Index.
There is a very slim possibility of Longfor Properties (960) being deleted; it could be replaced with either Yum China Holdings Inc (9987) or PICC Property & Casualty H (2328).
Short interest has stayed rangebound on JD Health (6618 HK) this year, while shorts have gone parabolic on XPeng (9868 HK) over the last few months.

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Nov 21

Daily Brief Event-Driven: Hang Seng Index Dec22 Rebal – 3 IN and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Hang Seng Index Dec22 Rebal – 3 IN, None Out (The March to 80 Continues)
FTSE All-World/All-Cap Index Rebalance: Watch Golden Agri-Resources & Delhivery
Hang Seng TECH Index Rebalance: Float & Capping Changes
HSCEI Dec 2022 Rebalance – 4 IN, 4 OUT, 3% One-Way Flow
Sapporo Holdings: Activist Investor, 3D Investment Partners Is Just A Few Steps From Turning Hostile
Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro
Link Admin’s In-Specie Distribution of PEXA: Active Selling Followed by Passive Buying
Hang Seng Tech Rebalance Dec 2022 – No Name Changes, Decent Flow
Despature Family/Somfy: Lowball Simplified Takeout, Timetable
Lowering Tick Sizes for KOSPI & KOSDAQ Starting Next January

Hang Seng Index Dec22 Rebal – 3 IN, None Out (The March to 80 Continues)

Hang Seng Index continues its march to 80 names, after which it will commence a march, or a slog, to 100 names in an effort to gain more comprehensive coverage
Doing so will admit names which move to Hong Kong from New York and will make way for more dynamism and lower SOE weights.
The three ADDs are Tingyi Holding (322 HK), China Resources Mixc Lifestyle Services (1209 HK), and Haier Smart Home Co Ltd (6690 HK) with a pro-forma combined weight just <1%.

FTSE All-World/All-Cap Index Rebalance: Watch Golden Agri-Resources & Delhivery

For Asia Pacific, there are 2 adds to the FTSE All-World Index, 2 adds to the FTSE All-Cap Index and 2 deletions from the FTSE All-World Index.
All changes are on expected lines. The one surprise is the non-inclusion of Rainbow Children’s Hospital (RAINBOW IN) to the All-Cap Index where it likely just failed investable market cap.
Sungeel Hitech (365340 KS) is also an add to the KOSDAQ 150 Index at the close on 8 December, while there is a huge lock-up expiry for Delhivery (DELHIVER IN).

Hang Seng TECH Index Rebalance: Float & Capping Changes

As expected, there are no adds or deletes for the Hang Seng Tech Index (HSTECH INDEX) in December. However, there are plenty of capping and float changes to drive flows.
The December rebalance is expected to have a one-way turnover of 2.3% resulting in a one-way trade of HK$1.9bn.
Short interest is greater than 5% of float on a few stocks and a continued recovering in markets could lead to a squeeze higher.

HSCEI Dec 2022 Rebalance – 4 IN, 4 OUT, 3% One-Way Flow

The HSCEI sees 4 names out, 4 names in. The ADDs are PetroChina (857 HK), Zhongsheng Group (881 HK), Li Auto (2015 HK), Haier Smart Home Co Ltd (6690 HK).
The DELETEs are Alibaba Health Information Technology (241 HK), China Gas Holdings (384 HK), Innovent Biologics Inc (1801 HK), and Bilibili (9626 HK).
One way volume is just under 4.7% with all the name changes, FAF changes, and capping flows.

Sapporo Holdings: Activist Investor, 3D Investment Partners Is Just A Few Steps From Turning Hostile

By Oshadhi Kumarasiri

Following a couple of investor-activism campaigns against Toshiba Corp (6502 JP) and Fuji Soft Inc (9749 JP), Singapore-based Japan-focused activist investor, 3D-Investment-Partners seems to be turning its attention towards Sapporo.
Earlier this month, 3D Investment Partners requested Sapporo’s outside directors to postpone the announcement of the new Medium Term Plan until they hear out opinions and new ideas from shareholders.
We believe that there’s a chance that 3D Investment Partners could turn hostile as Sapporo Holdings (2501 JP) seems to be completely ignoring the activist investor’s requests and proposals.

Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), Golden Energy & Resources (GER SP), 111 Inc (YI US), Perpetual Ltd (PPT AU).
Lowest spreads – Tyro Payments (TYR AU), Warrego Energy (WGO AU), Jinke Smart Services (9666 HK), Nitro Software Ltd (NTO AU), Uzabase Inc (3966 JP), PTB Group Ltd (PTB AU).

Link Admin’s In-Specie Distribution of PEXA: Active Selling Followed by Passive Buying

Link Administration (LNK AU) is selling 10% of its shareholding in PEXA Group (PXA) and plans to proceed with an in-specie distribution of the remainder to Link shareholders in January.
The increased float will make PEXA Group (PXA AU) the highest ranked non-index constituent and that should result in inclusion to the S&P/ASX 200 (AS51 INDEX) in March.
There could be selling on PEXA Group (PXA AU) from Link Administration (LNK AU) shareholders following the distribution. Then the passive flows will kick in and support the stock.

Hang Seng Tech Rebalance Dec 2022 – No Name Changes, Decent Flow

The Hang Seng Tech Index Review was announced on Friday after the close. There are no name changes but there is decent flow. 3% one-way turnover.
There are five capping changes and one very large share count change making things interesting.
All told, this is less impactful than it was last time, and less impactful than the other index rebalances announced.

Despature Family/Somfy: Lowball Simplified Takeout, Timetable

By Jesus Rodriguez Aguilar

Majority shareholders Despatures (73.9%) plan to use the abundant cash holdings of Somfy to finance a simplified cash offer at €143/share (16.8x EV/23e EBIT, 21.1x P/23e E, 20.6% premium).
In case of squeeze-out, Somfy intends to distribute afterwards an extraordinary dividend up to €620m (source: draft memo). The market believes the offer is low (gross spread is +0.98%).
I believe there are grounds for an offer sweetening (base-case valuation throws €150.98/share) and the risk-reward seems favorable considering a very motivated (and opportunistic) buyer. Long.

Lowering Tick Sizes for KOSPI & KOSDAQ Starting Next January

KRX will lower the tick sizes for KOSPI and KOSDAQ starting next January to reduce actual transaction costs and increase market liquidity by attracting more high-frequency traders.
KRX’s acceptance of the market’s long-standing demand at this point can be seen as primarily driven by the purpose of resolving the problem of reduced market liquidity.
We need to design a setup that takes a tighter holding period of event and flow trading in the Korean local market from next year.

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Nov 20

Daily Brief Event-Driven: HSI Index Rebalance: Baby Steps; Double Inclusion for Haier Smart Home and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HSI Index Rebalance: Baby Steps; Double Inclusion for Haier Smart Home
HSCEI Index Rebalance: Four Sets of Changes; And Some Close Calls
Fairfax India Holdings: Major Value Unlock Via BIAL IPO
Index Rebalance & ETF Flow Recap: HSCI, S&P/ASX, HSI, HSCEI, KOSPI2, KOSDAQ150, Wharf, Meituan
Weekly Deals Digest (20 Nov) – OZ Minerals, Pendal, Nearmap, Halcyon, Yashili, I-Tail, Lygend
Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date
SENSEX Dec 22 Index Rebalance: Tata Motors (TTMT) To Replace Dr Reddy (DRRD)
Last Week in Event SPACE: Tencent/Meituan, Halcyon Agri, Swire Pac, Perpetual/Pendal, OZ Minerals
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software
Hong Kong CEO & Director Dealings (18 Nov): Cross Harbour, Grand Ming, Ganglong, Pharmaron, JL Mag

HSI Index Rebalance: Baby Steps; Double Inclusion for Haier Smart Home

The inclusion of Tingyi Holding (322 HK), China Resources Mixc Lifestyle Services (1209 HK) and Haier Smart Home Co Ltd (6690 HK) gets us to 76 index constituents.
Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover of 2.01% and will result in a one-way trade of HK$3,845m.
Shorts on Haier Smart Home Co Ltd (6690 HK) and Tingyi Holding (322 HK) are around 5% of float and covering could take the stocks higher.

HSCEI Index Rebalance: Four Sets of Changes; And Some Close Calls

There are 4 adds and 4 deletes for the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance. The only surprises are some non-adds and non-deletes.
Using prices from the close on 18 November, estimated one-way turnover is 4.64% and will result in a one-way trade of HK$2,612m at the close on 2 December.
Short interest is larger on the deletes than the adds. However, at 17 days of ADV to cover and 11.7% of float, short interest on Zhongsheng Group is huge.

Fairfax India Holdings: Major Value Unlock Via BIAL IPO

Fairfax India Holdings (FIH/U CN), a holdco with investment activities exclusively in India, is edging closer to IPOing 49%-held Bangalore International Airport (BIAL).
Reportedly FIH is seeking a value upward of C$3.7bn for BIAL, a 45% premium over the current fair value holding.
Currently trading at a P/B of 0.6x compared to its five-year average of 0.8x, and the two-year average pre-Covid of 1.06x.

Index Rebalance & ETF Flow Recap: HSCI, S&P/ASX, HSI, HSCEI, KOSPI2, KOSDAQ150, Wharf, Meituan

Plenty of index change announcements in the last week – Kospi 200 Index, KOSDAQ 150 Index, Hang Seng Index, HSCEI, HSTECH, S&P BSE SENSEX Index and FTSE AW/AC Index.
There are a bunch of indices that have the end of their review periods in the coming week while announcements for China indices are expected post market close on Friday.
There were outflows from ETFs for most Asian markets over the week with China and Hong Kong ETFs taking the biggest hits.

Weekly Deals Digest (20 Nov) – OZ Minerals, Pendal, Nearmap, Halcyon, Yashili, I-Tail, Lygend

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – I-Tail (ITC TB) launches an up to US$593 million SET IPO, Lygend Resources & Technology (LR HK) set to launch an HKEx IPO to raise US$700-800 million.
Event-Driven developments – OZ Minerals Ltd (OZL AU), Perpetual Ltd (PPT AU)/Pendal Group (PDL AU), Nearmap Ltd (NEA AU), Halcyon Agri (HACL SP), Yashili International Holdings (1230 HK).

Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date

Lotte Chemical offers 8.5M new shares, which is ₩1.1T based on the provisional price of ₩130,000. This is a capital increase rate of 24.8%.
This event has already been leaked in advance from early last week, so it isn’t easy to expect a significant return from the short-selling approach immediately after the announcement.
Instead, we should pay attention to the KOSPI 200 passive inflow that occurs the day before the ex-date. It is estimated to be approximately 0.8x ADTV.

SENSEX Dec 22 Index Rebalance: Tata Motors (TTMT) To Replace Dr Reddy (DRRD)

As forecast, Tata Motors Ltd (TTMT IN) will be added to the S&P BSE SENSEX Index (SENSEX INDEX) in December to replace Dr. Reddy’s Laboratories (DRRD IN).
We estimate passive trackers will need to buy 2.3x ADV (7.2x delivery volume) on Tata Motors Ltd (TTMT) while selling 5x ADV (10.5x delivery volume) on Dr. Reddy’s Laboratories (DRRD).
The HDFC Limited (HDFC IN) / HDFC Bank (HDFCB IN) merger should see Adani Enterprises (ADE IN) added to the S&P BSE SENSEX Index (SENSEX INDEX) prior to the June rebalance.

Last Week in Event SPACE: Tencent/Meituan, Halcyon Agri, Swire Pac, Perpetual/Pendal, OZ Minerals

The in-specie distribution is basically a forward block sale of Meituan (3690 HK). You know it’s coming. You don’t know how large it is. It is not unlike a lockup situation.
China Hainan Rubber Industry (601118 CH) will start with 36% in Halcyon Agri (HACL SP). Founders and friends have ~10%. Getting to 50%+ will be easy.
The Swire Pacific (B) / Swire Pacific (A) ratio is near a 19-year low. The last time it dipped to 6% under its 3mo average, it bounced back in 4 weeks.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software

There are 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
Three new deals were discussed on Smartkarma: Beach Energy’s tilt for Warrego (WGO AU), Sumitomo’s offer for Sumitomo Precision (6355 JP), and Hainan Rubber’s offer for Halcyon (HACL SP).
Key updates took place for: Perpetual Ltd (PPT AU) / Pendal Group (PDL AU), Nitro Software Ltd (NTO AU), and OZ Minerals Ltd (OZL AU).

Hong Kong CEO & Director Dealings (18 Nov): Cross Harbour, Grand Ming, Ganglong, Pharmaron, JL Mag

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
These insights may flag those companies where shares have been pledged. Stocks mentioned include Cross Harbour (32 HK), Grand Ming (1271 HK), and Ganglong China Property (6968 HK)

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Nov 19

Daily Brief Event-Driven: Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further
OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP
Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote
EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End
Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)
Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)

Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further

By Devi Subhakesan

Bajaj Holdings and Investment (BJHI IN) is expected to be included in the MSCI India Index at the November SAIR (Read more about the index inclusion here: https://skr.ma/xhbPx)
Bajaj Holdings, a holding and investment company, with significant stakes in Bajaj Auto Ltd and Bajaj Finserv has historically traded at a steep discount to the market value of investments.
Its Holdco discount has narrowed to around 53% and has the potential to narrow further with greater ownership and visibility post the likely index inclusion.

OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP

OZ Minerals Ltd (OZL AU) has received a revised non-binding indicative offer from BHP Group Ltd (BHP AU) at A$28.25 per share, a 13.0% premium to the previously rejected offer.
The Board has granted four weeks of due diligence and intends to recommend a binding offer at A$28.25 per share, in the absence of a superior proposal.
While the offer is below the rumoured Board’s target of a A$30 offer, it is still attractive. At the last close, the gross spread to the offer is 3.3%.

Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote

Lifestyle International Holdings (1212 HK)’s vote on Mr Lau’s offer of HK$5.00 per share is at 10 am on Monday, 21 November. The wide spread of 6.6% reflects vote risk.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). No shareholder holds a blocking stake.
Ongoing weak Hong Kong retail sales and peers’ slightly de-rating should lower the vote risk. Headcount test not applicable. While light, we continue to expect the offer to succeed.

EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End

By Simon Harris

Alibaba unveiled an upsized buyback plan this week and stock rallied despite a revenue miss
Sentiment in China is changing with tweaks to the Covid strategy and improving economic outlook
Call buying has elevated upside vols providing trading opportunites for both directional and volatility traders

Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)

Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
Overall, net inflow over the past week was ~US$5.7bn, split between Shanghai (+US$2.98bn) and Shenzhen (+US$2.8bn).
The largest inflows were into Kweichow Moutai (600519 CH) and Midea Group (000333 CH). The largest outflows were in NARI Technology (600406 CH) and China Yangtze Power (600900 CH).

Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, the net outflow over the past week was ~HK$0.14bn, split (-HK$0.47bn) for Shanghai and (+HK$0.32bn) for Shenzhen.
The largest inflows were in Tencent (700 HK) and Hang Seng H Share (2828 HK). The largest outflows were inMeituan (3690 HK) and Tracker Fund of HK (2800 HK).

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Nov 18

Daily Brief Event-Driven: Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022)
Halcyon Agri: Hainan Rubber’s Conditional MGO
OZ Minerals (OZL AU): BHP Ups Offer by 13%; This Should Get Done
Delhivery IPO Lockup Expiry – US$2.8bn Lockup Release, with Softbank the Largest Holder
Pendal/Perpetual: Revised Terms As Supreme Court Orders Scheme To Proceed
Sea & Pinduoduo Are in Dangerous Territory With Tencent in Disposal Mode
OZ Minerals (OZL AU) And BHP Have a Deal – Investors Have an OTM Option on Copper
Lotte Chemical – Ready to Announce Rights Offering Close to 2 Trillion Won?
Pendal (PDL AU)/Perpetual (PPT AU) Deal Gets a Lifeline from the Court
STOXX Europe Quiddity Leaderboard Dec 22: ~7 Regular ADDs/DELs & ~5 Intra-Review ADDs/DELs Possible

Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022)

Early predictions for the March 2023 Nikkei rebalance (TBA early Feb) are little changed. One way turnover would still be about 1.4%. I see 3 ADDs and 3 DELETEs.
The 3 ADDs should be Oriental Land (4661), Renesas Electronics (6723), and Japan Airlines (9201). The 3 DELETES Toho Zinc (5707), Toyobo (3101), and Nippon Light Metal (5703).
Oriental Land is the one to watch in March. The Sep 2023 rebalance and subsequent ones are smaller in size but more interesting in impact.

Halcyon Agri: Hainan Rubber’s Conditional MGO

Halcyon Agri (HACL SP) has announced Sinochem, its largest shareholder with 65.2%, has entered into a SPA to sell 36% of shares out to China Hainan Rubber Industry (601118 CH).
Upon completion of the SPA, Hainan Rubber will make an MGO, conditional on a 50% tendering acceptance. Sinochem has provided an undertaking not to tender its remaining 29.2% stake.
The Offer Price? The SPA price is US$0.315/share and the Offer Price will be the SGD equivalent at the close of the SPA.

OZ Minerals (OZL AU): BHP Ups Offer by 13%; This Should Get Done

BHP Group has made a revised conditional, non-binding and indicative proposal to acquire all shares in OZ Minerals Ltd (OZL AU) at A$28.25/share, 13% higher than its earlier offer.
The OZ Minerals Board has agreed to give BHP Group Ltd (BHP AU) exclusive due diligence access for 4 weeks and intends to unanimously recommend the revised proposal.
Barring a competing proposal, this is BHP Group‘s best and final price – expect the stock to trade close to A$28/share today.

Delhivery IPO Lockup Expiry – US$2.8bn Lockup Release, with Softbank the Largest Holder

In May 2022, Delhivery raised around US$680m in its India IPO, the company is backed by a host of financial investors, the largest being Softbank.
Delhivery is an online logistics service provider which covers express parcel delivery, heavy goods delivery, part truckload (PTL) freight, truckload (TL) freight, supply chain solutions, cross border solutions etc.
In this note, we will talk about the upcoming lockup expiry.

Pendal/Perpetual: Revised Terms As Supreme Court Orders Scheme To Proceed

Under the revised terms, Pendal (PDL AU) shareholders will receive 1 Perpetual (PPT AU) share for every 7 Pendal shares plus $1.65/share cash versus 7.50 Pendal shares and $1.976 cash.
Separately, the Supreme Court of NSW ruled that Perpetual cannot delay the Scheme on the expectation of a more favourable Offer for the company.
The first court hearing for the Scheme has been deferred until next week to seek orders convening the Scheme Meeting and for the despatch of the Scheme Booklet to shareholders.

Sea & Pinduoduo Are in Dangerous Territory With Tencent in Disposal Mode

By Oshadhi Kumarasiri

After distributing over 450m of JD.com Inc. (9618 HK) shares to its shareholders late last year, Tencent (700 HK) took a short break from the downsizing of its public investments.
Downsizing seems to have restarted with yesterday’s announcement of the distribution of more than 950m Meituan (3690 HK) shares to Tencent shareholders.
Having already met Tencent’s soft self-sustainability criteria, Pinduoduo (PDD US) and Sea Ltd (SE US) could be lined up as Tencent’s next portfolio downsizing targets.

OZ Minerals (OZL AU) And BHP Have a Deal – Investors Have an OTM Option on Copper

After nearly 3 months of no talks and movement, then a flurry of both, BHP Group Ltd (BHP AU) and OZ Minerals Ltd (OZL AU) have an agreed Revised Proposal.
OZ Minerals Board has agreed to support the Revised Proposal at A$28.25/share, a 13% bump, subject to due diligence provided on an exclusive basis for four weeks.
A fully-franked dividend or capital return will be allowed (Scheme price to be adjusted). This will probably trade tight. One owns a call option on copper for probably 3-4 months.

Lotte Chemical – Ready to Announce Rights Offering Close to 2 Trillion Won?

Numerous local media mentioned today that Lotte Chemical (011170 KS) is getting ready to announce a major rights offering to acquire Iljin Materials.
The size of the rights offering has not been finalized but the range of the rights offering could be about 1 trillion won to 2 trillion won.
There are additional concerns about Lotte Chem funding additional capital into Lotte E&C, which could face more financial difficulties in the local construction sector.

Pendal (PDL AU)/Perpetual (PPT AU) Deal Gets a Lifeline from the Court

Pendal Group (PDL AU) entered a revised SID with Perpetual Ltd (PPT AU). The revised offer consists of scrip (1 Perpetual share for every 7 Pendal share) and cash (A$1.650).
Separately, the court found that Pendal could seek a range of remedies in addition to the A$23 million break fee should Perpetual terminate the scheme.
While Regal Partners (RPL AU)/BPEA EQT could yet derail the scheme by lobbing another bid for Perpetual, the unprecedented court ruling makes it more challenging and costly.

STOXX Europe Quiddity Leaderboard Dec 22: ~7 Regular ADDs/DELs & ~5 Intra-Review ADDs/DELs Possible

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EuroSTOXX Indices for the December 2022 Rebalance.
Including the addition of Porsche AG (P911 GR), there could be around 7 ADDs/DELs during the December 2022 Rebalance.
In addition, there could be as many as five more intra-review changes before the end of the year.

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Nov 17

Daily Brief Event-Driven: Meituan (3690 HK): Impact of Tencent’s In-Specie Dividend and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Meituan (3690 HK): Impact of Tencent’s In-Specie Dividend
Tencent Distribution of Meituan Shares Official – Impact and Index Implications
2023 High Conviction: Haw Par Is Cheap
Tencent Meituan Dividend – The US$20bn Overhang – Impact, Placement, Index, Other Investees
Halcyon Agri Suspended Ahead Of Possible Offer
KOSPI200 Index Rebalance: Just One Change
KOSDAQ150 Index Rebalance: 11 Changes with a Couple of Surprises
KOSPI 200 & KOSDAQ 150 Rebalance Changes + KOSPI 200 & KOSDAQ 150 Exclusion Candidates in 2023
Swire B Vs A – It Bounced Before, It Can Bounce Again – A 19 Year Low On the Ratio In Sight
KOSPI 200 & KOSDAQ 150 Constituent Changes: Several Surprises

Meituan (3690 HK): Impact of Tencent’s In-Specie Dividend

Tencent (700 HK) has announced that it will pay an interim dividend via an in-specie distribution of the bulk of its holding in Meituan (3690 HK).
Passive FTSE and MSCI trackers will receive shares in Meituan (3690 HK) from their Tencent (700 HK) holdings and they will not need to trade anything in the market.
First it was JD.com Inc. (9618 HK), now it is Meituan (3690 HK). The market will be looking for other stocks held by Tencent (700 HK) that could be next.

Tencent Distribution of Meituan Shares Official – Impact and Index Implications

In mid-August at mid-day, a Reuters article suggested Tencent (700 HK) would seek to divest its $24bn stake in Meituan (3690 HK) this year. The stock fell 9% that afternoon.
The general underlying suggestion was that regulators wanted them to sell. Other articles suggested later both aspects were “untrue”
With Q3 earnings, Tencent today announced a Jan23 distribution (Mar23 settlement) of 958,121,562 Meituan shares (1 for every 10 Tencent shares held). There are significant flow and index implications.

2023 High Conviction: Haw Par Is Cheap

Haw Par Corp (HPAR SP) is trading around multi-year trough levels on an implied stub valuation, and on an HPAR/UOL Group (UOL SP) ratio.
Preceding my comments on HPAR are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Tencent Meituan Dividend – The US$20bn Overhang – Impact, Placement, Index, Other Investees

On 16th Nov 22, post-market close, along with its 3Q22 results Tencent also declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
The share distribution follows the template of the US$16bn worth of JD.com shares that Tencent paid out after its dividend announcement at the end of 2021.
In this note, we talk about the implications of the deal.

Halcyon Agri Suspended Ahead Of Possible Offer

Natural rubber play Halcyon Agri (HACL SP) was suspended ahead of trading on the 14 November.
Word on the street is that a privatisation will be announced shortly.
The benefit of hindsight … Halcyon’s largest shareholder, SOE-backed Sinochem, recently increased its stake, paying ~S$0.45/share.

KOSPI200 Index Rebalance: Just One Change

There will be 1 addition and 1 deletion for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the December rebalance that will be implemented on 8 December.
Lotte Confectionery (280360 KS) was a high probability add while Samyang Holdings (000070 KS) was the second delete on the list. Hyundai Home Shopping Network (057050 KS) avoided deletion.
Passive trackers will need to buy around 14 days of ADV on Lotte Confectionery (280360 KS) and sell nearly 13 days of ADV on Samyang Holdings (000070 KS).

KOSDAQ150 Index Rebalance: 11 Changes with a Couple of Surprises

There are 11 inclusions and 11 exclusions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance to be implemented at the close on 8 December.
We had forecast most of the changes (10 adds and 9 deletes), so there are a few surprises. The inclusion of SillaJen Inc (215600 KS) is the biggest one.
The adds to the index become short sell eligible from the open of trading on 9 December while the deletions will not be short sell eligible from the same time.

KOSPI 200 & KOSDAQ 150 Rebalance Changes + KOSPI 200 & KOSDAQ 150 Exclusion Candidates in 2023

Korea Exchange announced the KOSPI 200, KOSDAQ 150, and KRX 300 rebalance changes today. Lotte Confectionery will be added and Samyang Holdings will be deleted from the KOSPI 200 index.
The rebalances of these Korean indices are regularly updated twice a year. The changes to these indices will be effective starting 9 December.
The potential exclusion candidates for KOSPI 200 in 2023 include K Car, Handsome, HS Enterprise, Zinus, and Hyundai Home Shopping.

Swire B Vs A – It Bounced Before, It Can Bounce Again – A 19 Year Low On the Ratio In Sight

Swire Pacific has been buying back Swire Pacific (B) (87 HK) and Swire Pacific (A) (19 HK) shares since August. They are now 58+% done with their HK$4bn buyback program.
The buyback so far has been 50% B shares and 50% A shares. This still seems odd to me but they are doing what they are doing.
B/A ratio is near a 19-year low. The last time it dipped to 6% under its 3mo average, it bounced back in 4 weeks. Now 5% cheap to average.

KOSPI 200 & KOSDAQ 150 Constituent Changes: Several Surprises

For KOSDAQ 150, SillaJen and WCP made it to the index. As for deletions, Intron Biotechnology, Ebest I&S, and Devsisters are additional names to leave the index through regular review.
Lotte Confectionery and Samyang Holdings do not have sizeable DTV. And they were fully expected. Nevertheless, the passive impact is so significant that the LONG/SHORT approach still seems valid.
We should focus on KOSDAQ 150 inclusions whose return has been high due to the inflow to secure a borrow pool for short-selling on top of the preemptive rebalancing flow.

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Nov 16

Daily Brief Event-Driven: TSMC (TSM/2330 TT): Berkshire Buying Could Push ADR Premium Higher and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

TSMC (TSM/2330 TT): Berkshire Buying Could Push ADR Premium Higher
Buffett’s Investment in TSMC – Impact on Samsung Electronics and SK Hynix
Nabtesco and Harmonic Drive – The Second Half of Splitsville So Pressure to Continue
KODEX Battery ETF Rebalancing & SungEel Hitech Trading Situation
Chindata: China Merchants Potentially In The Mix
Sapphire Foods IPO – Smallish Stock with Big (US$550m) Multiple PE Lockup Expiry
Chindata Takeover: China Merchants Enters as Government Interest in Data Centers Increase
S&P/ASX Index Rebalance Preview: Shrinking Number of Changes in Dec
Nitro (NTO AU)’s Binding Offer from Alludo to Force Potentia’s Hand?
HYBE Shorting Opportunity with a Lockup Release from Dunamu

TSMC (TSM/2330 TT): Berkshire Buying Could Push ADR Premium Higher

Overnight, Berkshire Hathaway Inc Cl B (BRK/B US) announced that it held 60.06m shares (US$4.43bn) of Taiwan Semiconductor (TSMC) – ADR (TSM US) as of 30 September.
That caused the ADR to spike after-hours and the local shares have rallied 8% today to close the gap with the ADR.
The ADR premium is trading near the lows and with Berkshire buying up a substantial chunk, Taiwan Semiconductor (TSMC) – ADR should trade at a bigger premium to Taiwan Semiconductor (2330).

Buffett’s Investment in TSMC – Impact on Samsung Electronics and SK Hynix

This insight will discuss the impact of Buffett’s investment in Taiwan Semiconductor (TSMC) – ADR (TSM US) on Samsung Electronics (005930 KS) and SK Hynix (000660 KS).
We believe that Buffett’s sizeable investment in TSMC is likely to have a positive impact on Samsung Electronics and SK Hynix.
This would be similar to how Buffett’s investment in the Japanese trading companies which has had a positive impact on the major Korean trading companies.

Nabtesco and Harmonic Drive – The Second Half of Splitsville So Pressure to Continue

In February 2021 Nabtesco Corp (6268 JP) announced it would sell half of its stake in Harmonic Drive Systems (6324 JP) to concentrate on its own products and growth.
It was a not-very-well-held secret Nabtesco had invested wanting to own HDS. HDS didn’t want to be owned. Eventually Nabtesco gave up. So they sold over time into low float.
Now they are letting go of the other half. Sale structure means ongoing pressure.

KODEX Battery ETF Rebalancing & SungEel Hitech Trading Situation

Given SunEel’s market cap and the level of relevance to the rechargeable battery business, KODEX will likely include it this time around.
If you are looking for a short-selling opportunity, I recommend adjusting the timing after this KODEX ETF passive event.
If you are long targeting the KOSDAQ 150 inclusion, I recommend taking a slightly longer holding window to additionally target the passive inflow of the KODEX ETF.

Chindata: China Merchants Potentially In The Mix

Bain Capital-backed Chindata Group (CD US) is on the move after Bloomberg flagged – again – interest from industry players.
This time, SOE-backed China Merchants Group is understood to be mulling a takeover of Chindata. Shares are up 23% since that article earlier this month.
Back in April, Bloomberg mentioned GDS Holdings (ADR) (GDS US), PE outfit PAG, and EQT AB (EQT SS)-backed EdgeConneX were rumoured to be interested in merging with Chindata.

Sapphire Foods IPO – Smallish Stock with Big (US$550m) Multiple PE Lockup Expiry

By Shifara Samsudeen, ACMA, CGMA

In Nov 2021, Sapphire Foods Limited (SFL), one of Yum Brand’s franchisees in the Indian subcontinent, raised around US$280m in its Indian IPO.
The lock-up on its shareholders will expire soon, with a number of PE funds on its register
In this note, we will talk about the upcoming lockup expiry.

Chindata Takeover: China Merchants Enters as Government Interest in Data Centers Increase

Chindata Group (CD US) is the leading carrier-neutral hyperscale data center solutions provider in Asia Pacific emerging markets.
At the beginning of the month, Bloomberg reported a takeover offer for Chindata from China Merchants Group, which is a state-owned company.
Several state-owned companies have shown interest towards acquiring data centers and data center companies, which is likely to be in line with China’s strategy of digitization.

S&P/ASX Index Rebalance Preview: Shrinking Number of Changes in Dec

Volatile stock prices could mean one change for the S&P/ASX 50 Index and one change for the S&P/ASX 200 (AS51 INDEX) at the December rebalance.
Atlas Arteria (ALX AU) could replace Lendlease Group (LLC AU) in the S&P/ASX 50 Index, while Monadelphous (MND AU) could replace St Barbara Ltd (SBM AU) in the S&P/ASX 200.
Short interest on St Barbara Ltd (SBM AU) has spiked in the last few weeks and there could be short covering ahead of implementation of the changes.

Nitro (NTO AU)’s Binding Offer from Alludo to Force Potentia’s Hand?

Nitro Software Ltd (NTO AU) has entered into a binding agreement with Alludo at A$2.00 per share via a scheme or an off-market takeover, with a 50.1% minimum acceptance condition.
This is a good move by the Board to force Potentia to improve its off-market takeover bid of A$1.80 per share. Alludo can leverage synergies to support a higher bid.
The shares are trading through Alludo’s terms as there is an expectation of Potentia returning with improved terms. The break fee implies that Potentia needs to offer at least A$2.02.

HYBE Shorting Opportunity with a Lockup Release from Dunamu

Dunamu may not be in a financial situation that will allow it to hold HYBE shares. With FTX’s liquidity crisis, Upbit’s liquidity management risk will inevitably rise to the surface.
Doubts about whether the size of Upbit’s assets is sufficiently absorbing the shock of a bank run are still strongly raised in the local market.
These concerns are likely to affect HYBE’s share price as the December 9 release approaches, and yes, we need to design short position setups aimed at this.

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Nov 15

Daily Brief Event-Driven: Wharf Holdings (4 HK): MSCI Deletion and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Wharf Holdings (4 HK): MSCI Deletion, Short Interest & Trade Ideas
Paytm (One 97) Lockup – US$4bn+ Lockup Expiry, Some Large Shareholders Are Underwater, a Lot Aren’t
Warrego Enters Into A Scheme With Beach
HSCI Index Rebalance and Stock Connect: Changes at the Margins
Nearmap (NEA AU)’s Update Results in an Unwarranted Increase in the Spread
Nitro Software: KKR’s $2.00/Share Firm Offer

Wharf Holdings (4 HK): MSCI Deletion, Short Interest & Trade Ideas

In a surprise, MSCI announced the deletion of Wharf Holdings (4 HK) from the MSCI China Index at the November SAIR that will be implemented at the close 30 November.
The stock dropped 14.3% on Friday as volume spiked 26x compared to ADV and 14m shares were shorted on the day.
Total short interest is estimated to be significantly lower than the estimated selling from passive MSCI trackers and there could be a move lower over the next few days.

Paytm (One 97) Lockup – US$4bn+ Lockup Expiry, Some Large Shareholders Are Underwater, a Lot Aren’t

In Nov 2021, Paytm raised around US$2.2bn via selling a mix of primary and secondary shares in its IPO.
The company is backed by Alibaba (ADR) (BABA US), Softbank Group (9984 JP) and counts Berkshire Hathaway Inc Cl A (BRK/A US) among its investors.
In this note, we will talk about the upcoming lockup expiry.

Warrego Enters Into A Scheme With Beach

The Stokes’ family-backed Beach Energy (BPT AU) is offering Warrego Energy (WGO AU)‘s shareholders $0.20/share, in cash, by way of a Scheme. That’s a 36% premium to the one-month VWAP.
A contingent value payment may be payable to Warrego shareholders from the sale of Warrego’s Spanish assets within 12 months
Warrego’s board unanimously recommend the Beach deal. The transaction is expected to complete in early March. The wild card is whether Strike Energy (STX AU) pitches a revised Offer.

HSCI Index Rebalance and Stock Connect: Changes at the Margins

We see 3 potential adds for the HSCI in December. We also see 26 potential adds and 16 potential deletes for the index in March.
Following the March rebalance, we see 22 potential inclusions to Stock Connect while we expect 37 stocks to be removed from the link.
Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.

Nearmap (NEA AU)’s Update Results in an Unwarranted Increase in the Spread

Nearmap Ltd (NEA AU)’s litigation and trading update resulted in the spread to Thoma Bravo’s A$2.10 offer widening to 7.7%. The scheme meeting is on 25 November.
There is no chance that the MAC clause will be triggered due to the downbeat trading update. However, the update is softening the stance of some of the retail dissenters.
There is a small chance of a bump as peers have re-rated. Nevertheless, the low spread prior to the update suggested that the risk of the NO vote was minimal.

Nitro Software: KKR’s $2.00/Share Firm Offer

Adobe rival Nitro Software Ltd (NTO AU) has announced KKR (via Alludo) has firmed its $2.00/share Offer, by way of a Scheme, in tandem with an off-market takeover.
Both the Scheme and takeover are subject to FIRB and MACs/prescribed occurrences. The takeover is subject to a 50.1% acceptance hurdle. The proposals have the unanimous support of Nitro’s board.
The Transaction Booklet is expected to be despatched to shareholders in early February 2023, with a Scheme Meeting expected to be held in March 2023.

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Nov 14

Daily Brief Event-Driven: FTSE All-World/All-Cap Index Rebalance Preview: Potential Inclusions & Lock-Up Expiry and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

FTSE All-World/All-Cap Index Rebalance Preview: Potential Inclusions & Lock-Up Expiry
Sumitomo Precision Products (6355) Buyout by Sumitomo Corp – Likely To Get Done
Merger Arb Mondays (14 Nov) – Golden Energy, Perpetual/Pendal, Origin Energy, Warrego, Uzabase
Warrego (WGO AU) Bidding War Between Strike (STX AU) And Beach (BPT AU)
Selling Sogo Seibu Doesn’t Mean Seven & I Will Sell Ito-Yokado
North Holdings 3/Caverion: Agreed Takeout

FTSE All-World/All-Cap Index Rebalance Preview: Potential Inclusions & Lock-Up Expiry

We see 4 potential adds, 1 close add and 1 potential delete for the FTSE All-World/All-Cap indices at the upcoming QIR that will be implemented at close on 16 December.
The largest impact will be the passive selling on Golden Agri Resources (GGR SP) due to a nationality change from Singapore to Ineligible.
There is a big lock-up expiry on Delhivery where US$2.89bn of shares will be free for trading on 21 November – that is significantly larger than the potential passive buying.

Sumitomo Precision Products (6355) Buyout by Sumitomo Corp – Likely To Get Done

On Friday, Sumitomo Corp (8053 JP) announced a bid for equity affiliate (they own 27+% but Nippon Steel 15%, top 2 is 40+%) Sumitomo Precision Products (6355 JP).
It’s a one-year high and 4-year high price, and 8x average 10yr EV/EBITDA but 4.6x 2024e EBITDA from the Mid Term Plan. And way below a 10-year high.
This gets done if Retail agrees to the tender. If 50% put in, that should do it. So I expect this gets done.

Merger Arb Mondays (14 Nov) – Golden Energy, Perpetual/Pendal, Origin Energy, Warrego, Uzabase

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads Pendal Group (PDL AU), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), 21Vianet Group (VNET US), 111 Inc (YI US), Golden Energy & Resources (GER SP).
Lowest spreads – Tyro Payments (TYR AU),Perpetual Ltd (PPT AU), OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), China Vast Industrial Urban Development (6166 HK), Moya Holdings.

Warrego (WGO AU) Bidding War Between Strike (STX AU) And Beach (BPT AU)