In today’s briefing:
- ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade
- Updated Tool (31May24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”
- Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100
- CSI Esoteric Index Rebals Jun 24: All Share Brokerage, China Internet, Medical, Defense, & Livestock
- Another Day Ending in Y, Another MBO Done Too Cheap. Today? Nagatanien (2899 JP).
- Impact on SK Inc Post Record Divorce Ruling for SK Group Chairman Chey Tae-Won
- Quiddity STAR 50/100 Jun 24 Rebalance: US$1bn+ One-Way Flow; Some Surprises; New Trade
- APM Human Services (APM AU): Madison Dearborn Partners’ Binding Proposal at A$1.45
- Quiddity SSE50/180 Jun 24 Rebalance: US$1.8bn One-Way Flow; LONGs up 8.6% Vs SHORTs in a Month
- Kakao Pay Lockup Expiry – US$1bn Overhang from Alipay
ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade
- There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the June rebalance.
- We correctly forecast 5/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
- Based on the estimated passive tracking AUM, the one-way trade across both indices is estimated to be CNY 3.69bn (US$508m).
Updated Tool (31May24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”
- In mid-January 2024, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
- The TSE list shows which companies have disclosed a policy/consideration. But no data/links. We are weeks ahead of the TSE and we have all the links (and the shame list).
- We created a tool to name everyone, show their reports, provide links to every document, and now a new tool. Put in a name, see the difference between the Old/New Reports.
Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100
- Nagatanien Holdings (2899 JP) recommended a Marunouchi Capital-sponsored MBO at JPY3,100, a 38.4% premium to the undisturbed price.
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The offer period is from 4 June to 16 July.
- While not a knockout bid, the offer represents a five-year high and requires a 58% minority acceptance rate. This is a done deal with payment commencing from 23 July.
CSI Esoteric Index Rebals Jun 24: All Share Brokerage, China Internet, Medical, Defense, & Livestock
- We have already discussed our flow expectations for the mainstream indices in the CSI family such as CSI300/500, SSE50/100, and the STAR50/100 for the June 2024 index rebal event.
- In this insight, we take a look at our flow expectations for the ADDs/DELs involved in the rebalance of some of the lesser known indices in the CSI family.
- The indices covered in this insight are All Share Brokerage, China Internet, Medical Devices, National Defense, and Livestock Breeding indices.
Another Day Ending in Y, Another MBO Done Too Cheap. Today? Nagatanien (2899 JP).
- MitCorp – the largest shareholder – and the Nagatani family – today announced an MBO where they will buy a classic ubiquitous brand at an Adjusted EV of 5.4x EBITDA.
- The equity check appears to buy at ~2.5x Mar27-29 average FCF but they probably have 50% of the shares in the bag. Retail, or who they sell to, matter.
- There is room for a noisy activist to get involved here and disrupt the retail ownership. But there are very few of those around. And none in it now.
Impact on SK Inc Post Record Divorce Ruling for SK Group Chairman Chey Tae-Won
- We discuss the outlook for the likely impact on SK Inc post record divorce ruling for the SK Group Chairman Chey Tae-Won and his estranged wife Roh So-Young.
- Last week, a South Korean appellate court ordered Chairman Chey to pay 1.38 trillion won to Roh. Chey is appealing this case and the Supreme Court’s ruling is still pending.
- It is in the best interest of SK Inc to raise the overall value of the company since the payment of the divorce is mostly based in cash.
Quiddity STAR 50/100 Jun 24 Rebalance: US$1bn+ One-Way Flow; Some Surprises; New Trade
- The June 2024 index review results for the STAR 50 and STAR 100 indices were announced after market close on Friday 31st May 2024.
- There will be 3 changes for the STAR 50 index and 9 changes for the STAR 100 index.
- We expect one-way flows of approximately US$750mn and US$314mn for the STAR 50 and STAR 100 index rebal events in June 2024.
APM Human Services (APM AU): Madison Dearborn Partners’ Binding Proposal at A$1.45
- APM Human Services (APM AU) has entered a SID with Madison Dearborn Partners (MDP) at A$1.45 per share, a 27.5% discount on CVC’s aborted non-binding proposal of A$2.00 per share.
- FIRB approval should be forthcoming as MDP is the largest shareholder, representing 45.56% of outstanding shares.
- The offer is disappointing but a weak trading update, deal fatigue and a concentrated shareholder register facilitate it. At the last close, the gross spread was 5.3%.
Quiddity SSE50/180 Jun 24 Rebalance: US$1.8bn One-Way Flow; LONGs up 8.6% Vs SHORTs in a Month
- The June 2024 index review results for the SSE 50 and SSE 180 indices were announced after market close on Friday 31st May 2024.
- There will be 5 changes for the SSE 50 index and 18 changes for the SSE 180 index.
- These changes could collectively cause one-way index flows of ~US$1.8bn during the June 2024 index rebal event. In this insight, we take a look at our final flow expectations.
Kakao Pay Lockup Expiry – US$1bn Overhang from Alipay
- Alipay will come out of its placement linked lockup for its remaining stake in Kakaopay (377300 KS) today.
- Alipay (i.e. Alibaba Group (9988 HK)) had earlier sold some of its stake in Jun 2022 and Mar 2024. It still has over US$1bn worth of shares left to sell.
- In this note, we talk about the deal dynamics and run the deal through our ECM framework.
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