In this briefing:
- Rakuten (4755 JP): Lyft IPO’s Big Lift Unlikely to Lead to a Sustained Re-Rating
- Hopewell Holdings (54 HK): A Reasonable but Not Great Exit for Shareholders
1. Rakuten (4755 JP): Lyft IPO’s Big Lift Unlikely to Lead to a Sustained Re-Rating
Lyft Inc (0812823D US) has kicked off its IPO by posting its S-1 filing last Friday. Rakuten Inc (4755 JP) is Lyft’s single largest shareholder with a 13.05% stake. Rakuten has invested around $700 million to acquire its current Lyft stake and stands to make 3-4 times its investment if Lyft achieves its rumoured IPO valuation range of $20-25 billion.
Lyft’s IPO valuation range was first reported by Reuters on 20 February 2019. On the back of the news, Rakuten’s shares have so far risen around 10%. Notably, at the IPO valuation range, the Lyft stake would account for 20-25% of Rakuten’s current market cap. While the Lyft IPO will prove to be a big winner for Rakuten from an ROI perspective, we believe that from a valuation perspective, the upside is modest.
2. Hopewell Holdings (54 HK): A Reasonable but Not Great Exit for Shareholders
Hopewell Holdings (54 HK), an infrastructure and property developer, is subject to a privatisation proposal from its Chairman, Sir Gordon Wu. The privatisation price of HK$38.80 cash per share is a 46.7% premium over the closing price on 30 November 2018, the day before the announcement of the privatisation proposal.
While predicting the success of Hong Kong privatisations is a challenge due to the high threshold of shareholder approval, we believe that the Hopewell privatisation proposal has a good chance of success as it offers a reasonable (but not great) exit for shareholders.
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