In this briefing:
- Japan Post Insurance Placement – 3x the IPO Size – Basics and Index Impact
- Huya Offering: Everyone Else Was Doing It Excuse
- Huya Placement: Best Performing Live Streaming Stock but Beware Douyu Is Catching Up
- Ruhnn (如涵) Trading Update – Worst First-Day Performance Out of Recent US ADR Listings
- Naspers: Addressing the Discount (Again). New Moves to Realize Value Are Having an Impact
1. Japan Post Insurance Placement – 3x the IPO Size – Basics and Index Impact
Yesterday, post-market close, Japan Post Holdings (6178 JP)(JPH) announced that it will sell 185m shares (including over-allotment) or 30.8% of Japan Post Insurance (7181 JP)(JPI) amounting to US$4bn. JPI plans to buy back up to 50m shares out of these, leaving around US$3.1bn worth of stock to be placed. Out of these 185m shares, 30% will be placed with foreigners.
The selldown is part of the government’s plan for privatization under which JPH is supposed to reduce its stake in JPI and Japan Post Bank (7182 JP)(JPB) to around 50%. This was highlighted in the IPO of the three entities in 2015. Thus, the deal is not totally unexpected but the timing of it was never certain. For people interested in more about the history and background, we’ve covered the IPO and JPH sell down in the below series of insights:
- All three IPOs: When the bank is cheap and holdco discount makes the mothership cheaper, then who needs insurance?
- JPI IPO: Three’s a crowd – A minnow amongst giants risks getting lost in the chatter
- JPB IPO: Dividend yield looks enticing versus JGBs yield, while risks are similar
- JPH IPO: Final call to board the mothership. They don’t come much cheaper than this.
- JPH Placement: Japan Post Holdings Placement – Similar Reasons, Similar Price Will Probably Yield Similar Returns
In this insight, I’ll comment on some of the deal dynamics and index weighting impact.
2. Huya Offering: Everyone Else Was Doing It Excuse
Follow-on offerings by Chinese ADRs are the flavour of the day. Hot on the heels of Qutoutiao Inc (QTT US) and Bilibili Inc (BILI US), HUYA Inc (HUYA US) filed for a potential $550 million public offering without presenting any details on the new ADS being offered. Also, certain selling shareholders will offer shares in the offering.
Huya is one of the few recent Chinese “new-economy” IPOs which has lived up to the hype by delivering a creditable post-IPO financial performance. While Huya has proven to be a good IPO, we believe this follow-on offering is highly opportunistic and would be tempted to participate only at a large discount.
3. Huya Placement: Best Performing Live Streaming Stock but Beware Douyu Is Catching Up
Huya, a leading live streaming player in China, announced share placement of USD 550 million after market close on April 3rd. In this insight, we will look at recent developments of Huya and score the deal in our ECM Framework.
4. Ruhnn (如涵) Trading Update – Worst First-Day Performance Out of Recent US ADR Listings
Ruhnn Holding Ltd (RUHN US) raised US$125m at US$12.50 per share, the mid-point of the price range. We have previously analyzed the IPO in:
- Ruhnn (如涵) IPO Review – Expensive Influence
- Ruhnn (如涵) Pre-IPO Review- Significant Concentration Risk
In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.
5. Naspers: Addressing the Discount (Again). New Moves to Realize Value Are Having an Impact
Naspers (NPN SJ) recently announced another attempt to reduce the holdco discount which has remained stubbornly high despite previous attempts by management to reduce it. Since the announcement there has been movement, so perhaps this time it really is different!
So what is being done? Naspers will spin off its international internet assets, which account for >99% of its value, into a newco. They will then list 25% of newco on the Euronext in Amsterdam by issuing these shares to Naspers’ shareholders. The intention is to create a vehicle which can attract increased foreign and tech investors without the complication of a South African listing. The company believes this has been a key factor behind the wide holdco discount. The move also reduces Naspers weighting in South African indices which is another contributing factor.
Alastair Jones sees the announcement as a positive, although there are still issues with the main listing being in South Africa. He still believes a buyback would be the most effective way to reduce the discount, but Naspers is also keen to keep investing.
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