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.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
