In today’s briefing:
- Rakuten (4755 JP) – A Big Deal With Very Interesting Characteristics – Index Matters
- Rakuten (4755 JP) Offering: Could Drop Some More Before Passive Buying Kicks In
- Penguin Int’l (PBS SP): Chairman & Dymon’s Bumped & Final Offer
- GLP J-Reit (3281 JP): Cheaper than Peers, Offering Could Be a Catalyst
- MVIS Australia A-REITs Index Rebalance Preview: Capping Changes & Flows
- Triton/Caverion: Drawing to a Close
- Liquid Universe of European Ordinary and Preferred Shares: May‘23 Report
- Iberdrola/PNM Resources: Long-Distance Race
Rakuten (4755 JP) – A Big Deal With Very Interesting Characteristics – Index Matters
- Yesterday (15 May 2023) just before EOD, an article ran suggesting a ¥300bn capital raise by Rakuten (4755 JP). The stock fell 10% in 10mins. Rakuten hemmed/hawed but didn’t deny.
- One day later, we have a deal. It is up to 546mm shares including greenshoe, which at the close was ¥333bn. 468mm shares to the public, 79mm to 3rd parties.
- This increases Real World Float by 95%. In that respect this is vaguely IPO-ish. Investors have to re-underwrite. Then Passive re-shrinks the float. Details matter.
Rakuten (4755 JP) Offering: Could Drop Some More Before Passive Buying Kicks In
- Rakuten (4755 JP) is looking to raise around US$2.4bn by selling shares via a Japanese Public Offering and an International Offering as well as through a third-party allotment.
- The stock has already dropped 13.7% in the last couple of days on large volumes as the rumours of the offering started to swirl.
- The offering prices late next week and passive trackers will be buying stock once the stock settles and this will provide support in the near-term.
Penguin Int’l (PBS SP): Chairman & Dymon’s Bumped & Final Offer
- On the 4 May, Singapore-based builder and operator of aluminum high-speed boats Penguin International (PBS SP) announced a Voluntary Unconditional Offer from its Chairman and Dymon Group at S$.82/share.
- The Offer Price was a lifetime high and likely sufficient to push for compulsory acquisition. However, the Offerors have now sweetened terms to S$0.83/share.
- As to be expected, this is trading to terms. Volume remains light.
GLP J-Reit (3281 JP): Cheaper than Peers, Offering Could Be a Catalyst
- On 15th May 2023, large-cap logistics JREIT GLP J-REIT (3281 JP) (“GLP”) announced a follow-on equity offering to fund part of their recently-announced property acquisition.
- The primary offer quantity is 209,991 units. In addition, there will also be an over-allotment quantity of 3,200 units. The total size of this offering could be roughly ¥30.6bn (~US$225mn).
- In this insight, we take a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.
MVIS Australia A-REITs Index Rebalance Preview: Capping Changes & Flows
- We do not expect any constituent changes in June (that could change though!). The only flows are likely to be from capping the constituents at 10% of the index weight.
- Capping changes will lead to a one-way turnover of 2.15% resulting in a one-way trade of A$14m. There are two stocks with over A$5m to trade.
- Stockland (SGP AU) will be the most affected stock with passive trackers needing to sell over 1 day of ADV. The stock has run up and shorts are increasing.
Triton/Caverion: Drawing to a Close
- Crayfish/Triton’s purchase price is the highest and now officially preferred by Caverion Corp (CAV1V FH)‘s Board of directors. The offer period for both offers expires on 17 May.
- Caverion’s board advisors believe the offer will be finalized between October and February. Shares trade above Bain’s alternative consideration (lower chance to succeed) and Triton has already secured 29.9%.
- Spread to Triton’s offer is 4%/7.9% (gross, annualised assuming settlement by 30 November), however the free float has been massively reduced, hence the liquidity too.
Liquid Universe of European Ordinary and Preferred Shares: May‘23 Report
- Since mid-April, spreads have generally widened across our liquid universe (12 have widened, 7 tightened). German spreads are tightening.
- Recommended trades long ordinary / short preferred shares: Fuchs Petrolub, SSAB Svenska Stal, Roche.
- Recommended trades long preferred / short ordinary shares: Carlsberg, Media-for-Europe, Sixt, VW, Grifols, Atlas Copco.
Iberdrola/PNM Resources: Long-Distance Race
- The New Mexico Supreme Court denied a joint motion filed by PNM Resources (PNM US), Avangrid Inc (AGR US) and the New Mexico Public Regulation Commission last February.
- The New Mexico Court assess the operation in an oral hearing convened next September. The delay of the decision implies higher uncertainty about the closing of this deal.
- I continue to believe that Iberdrola/Avangrid’s acquisition will be completed. PNM shares look fairly valued on an EV/Fwd EBITDA basis, therefore I see it as a reasonably balanced risk-reward proposition. Long.
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