In today’s briefing:
- SBI Launches Opportunistic, Unfair Offer for Shinsei (8303) And Shinsei Board Drops the Ball
- Yuexiu Property (123 HK): Rights Trade Playbook
- The Core of CFD Margin Call Risk May Lie in the JPM Counter, Not SG: Potentially Infected Names
- Merger Arb Mondays (15 May) – SBI Shinsei, Arteria, Toshiba, Yitai, Hailan, Allkem, Lian Beng
- Weekly Deals Digest (14 May) – Toshiba, Arteria, Shinsei, Yitai Coal, Allkem, Horizon Construction
- Lian Beng: Circ Out. IFA (Rightfully) Says Not Fair
- InvoCare (IVC AU): TPG’s Revised $13/Share Non-Binding Offer
SBI Launches Opportunistic, Unfair Offer for Shinsei (8303) And Shinsei Board Drops the Ball
- After the large tender offer in late 2021, SBI was always going to try to take Shinsei Bank private. Now they have launched their deal at ¥2,800/share.
- That is below fair according to the Board, Special Committee, and implicitly to SBI. But the Shinsei Board has recommended shareholders tender so The Government will vote to squeeze out.
- I expect some upset, the possibility of some activism, but it all plays out in the back end in my opinion. Not the front end.
Yuexiu Property (123 HK): Rights Trade Playbook
- On 20 April, Yuexiu Property (123 HK) announced plans to raise US$1.1 billion through 30 rights shares for every 100 existing shares rights offering, with a rights price of HK$9.00.
- Since the announcement of the rights issue, Yuexiu shares have declined by -23.6% to the undisturbed price and by -18.2% compared to the TERP of HK$11.74 per share.
- The shares went ex-rights on 2 May and the rights start trading on 15 May. Link REIT (823 HK)’s trading over its rights period provides the playbook for Yuexiu’s trading.
The Core of CFD Margin Call Risk May Lie in the JPM Counter, Not SG: Potentially Infected Names
- The possibility of experiencing a CFD margin call is a genuine and persistent concern. Even a small trigger causes selling pressure to intensify and results in a rapid downward trend.
- The counter that the local market is closely monitoring is JPM. The selling pressure from the JPM counter since May 8th has exhibited an abnormal pattern.
- Eight names are screened. They are KOSPI 200/KOSDAQ 150 constituents with JPM’s net selling volume to SO being 0.2% or higher, and a margin-equity ratio of 3% or higher.
Merger Arb Mondays (15 May) – SBI Shinsei, Arteria, Toshiba, Yitai, Hailan, Allkem, Lian Beng
- 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 111 Inc (YI US), ARTERIA Networks Corp (4423 JP), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK), Hailan Holdings (2278 HK).
- Lowest spreads – Healius (HLS AU),Liontown Resources (LTR AU), Penguin International (PBS SP), Lian Beng (LBG SP), Mincor Resources NL (MCR AU), Blackmores Ltd (BKL AU), Arcland Service.
Weekly Deals Digest (14 May) – Toshiba, Arteria, Shinsei, Yitai Coal, Allkem, Horizon Construction
- 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 – Nexus Select Trust (NST IN), Tata Technologies (TATATECH IN), ADICON Holdings Limited (ADI HK), Horizon Construction Development (1887128D HK) IPOs.
- Event-Driven developments – ARTERIA Networks Corp (4423 JP), SBI Shinsei Bank (8303 JP), Toshiba Corp (6502 JP), Hailan Holdings (2278 HK), Inner Mongolia Yitai Coal Company Ltd (3948 HK), Allkem.
Lian Beng: Circ Out. IFA (Rightfully) Says Not Fair
- In response to media feedback calling out the low-balled Offer, the Ong family bumped the Offer Price for Lian Beng (LBG SP) by 9.7% to S$0.68/share and declared terms final.
- At 0.43x P/RNAV, and with the bulk of the assets related to investment/development property, the price was still wrong,
- The Circular is now out. The IFA considered terms to be not fair and not reasonable. The same opinion as in the 2021 Offer.
InvoCare (IVC AU): TPG’s Revised $13/Share Non-Binding Offer
- On the 7 March, PE outfit TPG took a 17.8% stake in InvoCare (IVC AU), Australia’s leading funeral services provider, and also pitched a A$12.65/share non-binding Offer via a Scheme.
- The Indicative proposal was subject to the completion of due diligence. InvoCare rejected the proposal on the 27 March. On the 24 April, TPG withdrew its NBIO.
- TPG has returned with a revised A$13/share, inclusive of a A$0.60/share fully franked dividend. If the proposal becomes a binding transaction, InvoCare’s Board intends to unanimously recommend it.
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