In today’s briefing:
- KKR To Sell a 20-22% Stake in Kokusai Electric (6525)?
- Asia Cement (743 HK): $3.22/Share Offer – Really?
- Nikkei 225 Index Rebalance Preview (Sep 2024): Potential Adds/Deletes, Capping & Funding Changes
- Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO
- Kokusai Electric (6525 JP): Placement, Buyback & Index Flows
- Kokusai Electric (6525 JP): Rumoured KKR US$1.8 Billion Secondary Offering
- KRX New Deal Index Rebalance Preview: Lots of Change; Shift Up Listing Adds to It
- Wiwynn GDR Offering – US$1.45bn Dilutive Offering, but Momentum Has Been Very Strong
- HKTV (1137 HK)’s Low-Balled Buyback Gets The Nod
- Kokusai Electric (6525 JP): A US$2.0 Billion Secondary Offering
KKR To Sell a 20-22% Stake in Kokusai Electric (6525)?
- Today, a Reuters article came out saying that KKR would sell down half its 43% stake in Kokusai Electric (6525 JP) according to “two people familiar with the matter.”
- The article also said Kokusai Electric would buy back shares. Kokusai responded with a TDNET release saying “we did not release this info but we are considering various capital policies.
- It pays to look at the Shareholder Structure as it stands. This is bigger than it looks.
Asia Cement (743 HK): $3.22/Share Offer – Really?
- After Chinese cement play Asia Cement China (743 HK) (ACC) was suspended on the 28th May, a punchy Offer from its parent Asia Cement (1102 TT) was expected.
- Not to be. Asia Cement is offering $3.22/share, best & final. A 3.01% discount to last close, ~ 45% premium to undisturbed, and a whopping 37% discount to net cash.
- Asia Cement plus concert parties hold 73.38%, so a blocking stake at the Court Meeting is 2.662%. One (possible) aspect in Asia Cement’s favour is that ACC is not shortable.
Nikkei 225 Index Rebalance Preview (Sep 2024): Potential Adds/Deletes, Capping & Funding Changes
- The review period for the Nikkei 225 Index September rebalance ends in three weeks. There could be three changes at the rebalance with sector balance used for the additions.
- Depending on the changes, passive trackers will need to buy between 3-57x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-8.4x ADV on the deletions.
- Fast Retailing (9983 JP)‘s index weight is currently higher than 10% and that will result in capping in September. Passives will need to sell 6x ADV in the stock.
Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO
- Today post-close we got confirmation of yesterday’s Reuters scoop of a secondary selldown on Kokusai Electric (6525 JP) after the stock fell 7.2% in heavy volume.
- KKR HKE LP and KSP Kokusai LLC (Koch) will together sell 52.5mm shares plus another 7.8mm+ in the greenshoe. Split is 50/50 domestic/international.
- This is 60+mm shares against 51mm shares held by non-passive holders ex-Capital (who has been selling). It’s a lot of stock at a high price.
Kokusai Electric (6525 JP): Placement, Buyback & Index Flows
- KKR and KSP Kokusai will offer 52.51m-60.38m shares (US$1.76bn-2bn) of Kokusai Electric (6525 JP) in a secondary offering that will likely be priced on 22 July.
- Kokusai Electric (6525 JP) will also buy back up to JPY 18bn of its shares. At the last close, that is 3.33m shares (1.2x ADV).
- Trackers of one global index will buy stock at the time of settlement of the shares. The (much) bigger buying will come at the end of August.
Kokusai Electric (6525 JP): Rumoured KKR US$1.8 Billion Secondary Offering
- Reuters reported that KKR & Co (KKR US), the largest Kokusai Electric (6525 JP) shareholder, plans to sell about half of its 43% stake, worth around JPY300 billion.
- As Kokusai’s shares are trading at 3.2x the IPO price of JPY1,840, KKR would be tempted to reduce its stake further. The 180-day IPO lock-up period expired on 22 April.
- Kokusai anticipates a return to growth and margin improvement. However, Kokusai trades at a material premium to peer multiples and is fully priced.
KRX New Deal Index Rebalance Preview: Lots of Change; Shift Up Listing Adds to It
- The review period for the September rebalance ends 31 July, the changes will be announced in the first week of September and implemented at the close of trading 12 September.
- There are changes expected for each of the Secondary Battery, Bio, Internet, Game and BBIG indices. The Shift Up (462870 KS) listing should result in more changes.
- The largest flows will be in Posco Future M, Ecopro BM, SK Biopharmaceuticals, Alteogen, Douzone Bizon, SKC Co and Kakao Corp.
Wiwynn GDR Offering – US$1.45bn Dilutive Offering, but Momentum Has Been Very Strong
- Wiwynn Corp (6669 TT) is looking to raise around US$850m in its global depository receipts (GDRs) offering.
- Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
HKTV (1137 HK)’s Low-Balled Buyback Gets The Nod
- Back in May, online shopping platform play Hong Kong Television Network (1137 HK) announced a buy-back of 11.25% of shares out, at $2.15/share, a mediocre 20.8% premium to undisturbed.
- The thrust of the Offer was to lift co-founder Ricky Wong’s stake to 51.55% from 45.75%. But that required independent shareholders approving a whitewash waiver not to make a MGO.
- I didn’t expect shareholder pushback. And there wasn’t. Tendering closes on the 23rd July. Keep an eye on CCASS movements. Shares gained 4.7% yesterday prior to the EGM outcome. Mmm.
Kokusai Electric (6525 JP): A US$2.0 Billion Secondary Offering
- Kokusai Electric (6525 JP) has announced a secondary offering of up to 60.4 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY326 billion (US$2.0 billion).
- The secondary offering facilitates KKR and KSP Kokusai Investments’ ability to crystallise substantial IPO gains—the shares are trading at 3.2x the IPO price of JPY1,840.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 22 and 24 July (likely 22 July).
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