In today’s briefing:
- Readytech (RDY AU): Microequities Baulks At PEP’s A$4.50/Share Indicative Offer
- S&P BSE/Sensex Quiddity Leaderboard Dec 22: Potential ADDs Could Outperform the Index
- EQD | ARK Innovation (ARKK US): Is It Time to Get Back into Growth?
- ReadyTech’s Indicative Offer of A$4.50 from Pacific Equity Partners Good Enough?
- Close Out the Pair Trade Between LG Chem & LG Energy Solution
- (Mostly) Asia M&A: October 2022 Roundup
- KPIT: Strong Execution and Bullish Outlook
- Changes in Voting Practices of Japan’s Major Investment Managements Will Take Time to Take Hold
- DeFi Options Protocols Series (#3): Where Can the Next Phase of Growth Come From?
Readytech (RDY AU): Microequities Baulks At PEP’s A$4.50/Share Indicative Offer
- Software outfit ReadyTech (RDY AU) has announced an indicative proposal from Pacific Equity Partners and affiliates, to acquire ReadyTech by way of a Scheme of Arrangement at $4.50/share.
- Pemba Capital, with 32.01% of shares out, are in discussion with PEP as to what appears to be the PE firm rolling over shares.
- ReadyTech’s independent board has granted PEP non-exclusive due diligence to flesh out a firm Offer. According to media reports, Microequities, with ~13%, is not on board whatsoever.
S&P BSE/Sensex Quiddity Leaderboard Dec 22: Potential ADDs Could Outperform the Index
- In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the December 2022 Rebalance.
- The reference period for the trading data used for the index selection ended on 31st October 2022.
- There have been a couple of key revisions to the index selection methodologies for SENSEX and SENSEX Next 50 which could have important consequences.
EQD | ARK Innovation (ARKK US): Is It Time to Get Back into Growth?
- Growth Stocks have been hammered in the rising rate environment
- Inflation may have peaked and central banks could be reaching the end of the hiking cycle
- We look at derivative strategies on ARKK US to gain a broad exposure to the growth and tech
ReadyTech’s Indicative Offer of A$4.50 from Pacific Equity Partners Good Enough?
- ReadyTech Holdings Ltd (RDY AU) confirmed that it received a conditional, non-binding indicative proposal from Pacific Equity Partners (PEP) at A$4.50 per share, a 38.9% premium to the undisturbed price.
- PEP aims to jointly work with Pemba, the largest shareholder with a 32.01% stake, on the proposal. Microequities, the second-largest shareholder, is said to oppose the offer.
- The offer represents an all-time price high but struck at a discount to peer multiples, suggesting room for a bump. At last close, the spread to the offer is 8.4%.
Close Out the Pair Trade Between LG Chem & LG Energy Solution
- On 25 October, we recommended a pair trade between LG Chem (go long) and LGES (go short). Since then, this trade has resulted in a net gain of 15.7%.
- It is very unusual to get this kind of alpha sized gains on Korean large caps in such a short time period.
- Given the sharp net appreciation on this pair trade in the past week, we would close out this trade.
(Mostly) Asia M&A: October 2022 Roundup
- For the month of October, 6 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
- The average premium for the new deals announced (or first discussed) in October was ~56%, and a year-to-date average of 40%.
- This compares to the average premium for all deals in 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 33%, 31%, and 31.5% respectively.
KPIT: Strong Execution and Bullish Outlook
- KPIT Technologies (KPIT) reported decent Q2FY23 earnings. Sales grew 8.3% QoQ and 27% YoY in Constant Currency (CC) terms. EBITDA and Net Profit grew 33% and 28% YoY, respectively.
- Led by an all-time high order pipeline, KPIT Technologies (KPITTECH IN) gave a bullish outlook and upgraded its FY23 growth guidance. KPIT’s Technica acquisition also looks very promising.
- In terms of order pipeline, KPIT has a couple of mega deals ($100mm+) in the offing, which if realized, would be the first-ever in its history.
Changes in Voting Practices of Japan’s Major Investment Managements Will Take Time to Take Hold
- Because there’s nothing about addressing environmental issues that the company itself opposes because they are global issues, it’s relatively easy to vote in favor of shareholder proposals on environmental issues.
- Governance proposal is the most sensitive because it’s directly related to election of directors. It’s challenging for domestic investment managers to vote in favor of shareholder proposals during proxy fights.
- FSA’s tightening of oversight of ESG investment trusts has triggered shift by major Japanese investment managers toward establishing ESG-related-voting policies and exercising their voting rights in accordance with these policies.
DeFi Options Protocols Series (#3): Where Can the Next Phase of Growth Come From?
- DeFi options protocols’ TVL did not change much in the past three months despite the bear market we are now in.
- Many (TradFi) institutions and institutional investors we spoke to believed the next bull market/major innovations in DeFi might be coming from protocols that offer yields from real-world assets.
- To drive the next phase of growth, options protocols should leverage their composability to tap into it by offering those protocols additional use cases related to options.
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