Daily Brief Japan: Honda Motor, Invincible Investment, Kyoto Financial Group and more

In today’s briefing:

Big Honda (7267) Offering – Flow Timing Matters
Invincible Investment Corp Placement – Another Accretive Acquisition, past Deals Have Done Well
Kyoto Financial Group (5844 JP) – Limited Shareholdings Unwind, for Now

Big Honda (7267) Offering – Flow Timing Matters

The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail – 80% of the book – is now. The price today closed at ¥1,665/share.
The Offering has follow-on “non-discretionary” demand which is non-negligible. It is worth understanding the amounts and timing.
The lockups and non-discretionary demand, along with Honda’s relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.

Invincible Investment (8963 JP) is looking to raise around US$375m in its primary follow-on offering. The proceeds will be used to partially acquire 12 assets from its Sponsor’s affiliates.
The REIT has been very active on the acquisition front, and has highlighted its ongoing discussions with its Sponsor for acquisitions. Thus, the current deal should be well flagged.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

Kyoto Financial’s stakes in three key listed Japanese corporates are valued at over 85% of its market capitalization with its total equity holdings accounting for 130%+ of its market capitalization
Kyoto management intends to retain the bulk of the bank’s equity holdings, opposing the growing trend for Japanese listed companies to unwind crossholdings; management will review this policy in November
In the near term, we see no major catalyst for Kyoto to accelerate its equity holdings unwind and so, combined with its underwhelming fundamentals, we are negative on Kyoto Financial

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