In today’s briefing:
- StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI
- KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid
- Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
- Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800
- Tata Motors (TTMT IN): Index Impact of DVR Cancellation
- SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On
- Quiddity Leaderboard F100/250 Sep 24: High-Impact F250 Potential ADDs Could Outperform the Index
StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI
- Barito Renewables Energy (BREN IJ) is down 19% in the past month. But still accounts for ~730% of parent Barito Pacific (BRPT IJ)‘s market cap. Still unsustainable.
- Preceding my comments on the Barito complex AND the Kyocera Corp (6971 JP) / KDDI Corp (9433 JP) Holdco, are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation (sub/parent) >20%.
KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid
- KKR has announced its previously leaked takeover of Fuji Soft Inc (9749 JP). Two activists with 30+% between them have agreed to tender at ¥8,800.
- Given what the founder, crossholders, and other arbs own, this gets done easily. Congrats on the win to the activists.
- We will see more activism and more pressure on under-earning companies to go private to clean themselves up outside the public eye. Big opportunities for years.
Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
- Trading opportunities arise when overseas traders’ SSF positions face unwinding by local market makers, who enter SSF positions and take opposing spot positions, unwinding at expiry.
- August-Expiry SSF data shows reverse flow impact by local market makers today, with varying degrees of impact per stock but an observable overall trend.
- With ongoing market volatility in Korea, consider setups targeting price impacts from reverse flows of sector pairs trading on the next SSF expiration date.
Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800
- Following media reports, Fuji Soft Inc (9749 JP) announced a pre-conditional tender offer from KKR at JPY8,800 per share, a 1.0% discount to the last close price of JPY8,890 (8 August).
- The pre-condition is approvals under competition laws of Japan, Vietnam and possibly Belgium. The offer is anticipated to commence in mid-September.
- The offer is a knockout bid and the culmination of an auction process. The board’s recommendation and the irrevocables from activist shareholders ensure this deal is done.
Tata Motors (TTMT IN): Index Impact of DVR Cancellation
- The Tata Motors Ltd (TTMT IN) / Tata Motors DVR (TTMT/A IN) scheme of arrangement has received shareholder approval and regulatory approvals and should be implemented in the short-term.
- There will be small buying from global passive trackers while there will be much bigger buying from NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers.
- In total, we estimate passive trackers will need to buy 25.2m shares (US$308m; 1.9x ADV) of Tata Motors Ltd (TTMT IN) with buying coming in at different times.
SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On
- SK Innovation is considering on using its treasury shares to inject capital into its EV battery making subsidiary SK On.
- The appraisal rights exercise price is 111,943 won per share (15% higher than current price). Many minority shareholders are likely to exercise their appraisal rights in SK Innovation.
- We remain Bearish on SK Innovation. We continue to be negative on the SK Innovation and SK E&S merger. Plus, we are concerned about the continued weakness at SK On.
Quiddity Leaderboard F100/250 Sep 24: High-Impact F250 Potential ADDs Could Outperform the Index
- In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the September 2024 index rebal event.
- There could be up to three M&A-related intra-review changes in the next few weeks.
- Apart from that, there could be two changes for the F100 index and two other changes for the F250 index during the September 2024 review.
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