In today’s briefing:
- Toshiba (6502) Update – Shares Down Since Last Look, “News” Isn’t Really. IRR Grid.
- Toshiba – The Bidders Emerge
- Softbank (9984 JP) – EToro’s Funding “Down Round”
- Nidec (6594) | The Number One EV Play in Japan
- Don’t Forget to Check for Deemed Shares Even if a Company Have Reduced Its Policy Shareholdings
Toshiba (6502) Update – Shares Down Since Last Look, “News” Isn’t Really. IRR Grid.
- Overnight, Toshiba Corp (6502 JP) has released an update “Progress Report on Discussions with Potential Investors and Sponsors. Four advance to the second round, including both PE and strategic investors.
- Nikkei reported those advancing were Bain, CVC, Brookfield, and JIP-JIC. Blackstone did not advance. Yesterday, Reuters reported that KKR had declined to bid, but might join another bid.
- Now parties will start due diligence, and Toshiba will examine bids for “measures to enhance corporate value” and certainty of execution (given national security-sensitive issues, and funding).
Toshiba – The Bidders Emerge
- The Nikkei reported yesterday that Toshiba had winnowed the pool of potential partners down to four candidates.
- All four names (Bain, CVC, Brookfield and Japan Industrial Partners/Japan Investment Corp) have been connected to Toshiba previously.
- We wonder whether this pool of candidates points to a higher likelihood of a strategic partnership rather than a full buyout.
Softbank (9984 JP) – EToro’s Funding “Down Round”
- The planned eToro IPO via SPAC merger with FinTech V was terminated in early July, due delayed regulatory process as well as poor market conditions
- The now defunct SPAC deal had implied an eToro valuation in excess of USD10bn; post failed SPAC deal, its latest funding round implies a valuation range of USD5bn to USD6bn
- Softbank made its eToro investment through the Vision Fund 2 in 4Q 2020; Softbank had been counting on the SPAC deal with FinTech V as its partial eToro exit strategy
Nidec (6594) | The Number One EV Play in Japan
- Nidec reported 1Q earnings with clear evidence that near-turn earnings have bottomed. Now the market can focus on what matters, E-Axles
- The E-Axle outlook strong than ever across demand, production, and profitability
- We are bullish on the stock at 30x forward earnings versus the 5-year average of 55x, especially as China accelerates policies to drive EV adoption
Don’t Forget to Check for Deemed Shares Even if a Company Have Reduced Its Policy Shareholdings
- I believe the change in TOPIX float calculation criteria had significant impact on the pace of reductions last year. It’s necessary to pay attention to whether the pace will continue.
- “Deemed shares held” are shares contributed to the retirement benefit trust, and the company retains the right to direct the voting rights. Remember that cross-held shares exist here as well.
- I would like listed companies to settle the issue of policy shareholdings as soon as possible and focus on how to raise profit margins, which is the biggest issue.
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