In today’s briefing:
- DigiCo REIT (DGT AU) IPO: Offering Details & Index Implications
- NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
- CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
- 7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
- NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
- Oji Paper (3861 JP) – Big New Buyback After Crossholding Sales And An Activist Peeking From Register
- NEC Networks (1973 JP) Final Showdown II – Synergies Not Included, So Fair Value Not Offered
- VCredit (2003 HK): Ma Makes His Move?
- Insignia Financial (IFL AU): Bain Contemplating a Privatisation Bid
- Lufax (6623 HK): On Ping An’s Stake Increases
DigiCo REIT (DGT AU) IPO: Offering Details & Index Implications
- DigiCo REIT (DIGICO AU) is looking to raise nearly A$2bn in its IPO by selling 399.1m shares at A$5/share. Stock is expected to list on the ASX on 12 December.
- HMC Capital (HMC AU) will own 18.2% of DigiCo REIT (DIGICO AU) after the IPO while IPO investors will own 72.5% of the company.
- Subject to DigiCo REIT being an eligible stapled security, we expect the stock to be included in global and local indices between March and June mopping up 11.7% of float.
NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
- Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price.
- The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely.
- Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares.
CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
- There are 16 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 December.
- There are 257 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$9bn.
- Stocks with the largest inflows and impact have outperformed stocks with the largest outflows and impact over the last few weeks. That could continue for the next couple of weeks.
7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
- Recent reports suggest an MBO if firming up, with partial sale of US to ACT and even the Japan CVS business so a big value solution for all concerned.
- Not so fast: an ACT purchase of 7-11 US looks more likely to be blocked given yesterday’s ruling on the merger of grocery giants Kroger and Albertsons.
- The valuation of the Japan business may need a correction too if the last six months of poor numbers continue – given this is because of price perception, they may.
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
- There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
- Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
- The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.
Oji Paper (3861 JP) – Big New Buyback After Crossholding Sales And An Activist Peeking From Register
- Paper manufacturer Oji Holdings (3861 JP) has spent 25 years not going anywhere. Their current MTMP isn’t exciting. And it looks like they will fail worse than last time.
- But an activist put their head above the parapet recently, and now the company has announced larger new cross-holding selldown targets, and a big 9% buyback, with a ToSTNeT-3 tomorrow.
- The stock is at 0.47x book. They have nearly ¥400bn of financial assets which are non-core. They have land and property holdings. And they have lots of cross-holdings to repurchase.
NEC Networks (1973 JP) Final Showdown II – Synergies Not Included, So Fair Value Not Offered
- Yesterday, NEC Corp (6701 JP) extended its Tender Offer to buy controlled subsidiary Nec Networks & System Integr (1973 JP) for another 10 days. It did not have enough shares.
- As discussed here 4wks ago, then here yesterday, NEC might not get enough shares unless it offers a higher price. There’s a reason. It is not a high enough price.
- METI Fair M&A Guidelines and Guidelines for Corporate Takeovers define fair. Guarantees of a floor price and a fair allocation of synergies. One is questionable. The other is not there.
VCredit (2003 HK): Ma Makes His Move?
- VCredit Holdings Ltd (2003 HK), a provider of consumer financial services in China, was listed on the 21st June 2018 at HK$20/share. Shares are currently down 90%.
- Ma Ting Hung, VCredit’s chairman, held 35.6% at the time of listing, and currently holds 39.85%.
- VCredit was suspended this morning pursuant to the Takeovers Code. Now might be the time for Ma to take VCredit back into the fold.
Insignia Financial (IFL AU): Bain Contemplating a Privatisation Bid
- IOOF Holdings (IFL AU) shares rose 11% in the final minutes of trade, fueled by media reports suggesting that Bain was in the advanced stages of making a buyout offer.
- The presence of several substantial shareholders necessitates an attractive takeover premium. Takeover interest is unsurprising as Insignia trades at a material discount to peers.
- We use several methods to triangulate the likely offer, which suggests a price range of A$3.44-5.50 per share, with an average of A$4.67, a 37.4% premium to the last close.
Lufax (6623 HK): On Ping An’s Stake Increases
- As discussed in PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock, Ping An increased its stake in Lufax (6623 HK) to 56.82% via a scrip dividend.
- This triggered a zero-premium MGO, which closed on the 28 October 2024 with negligible tendering.
- Via an amendment to a tri-party agreement, Ping An subsequently lifted its stake to 66.85%. It’s worth understanding how Ping An has taken its stake >50% and beyond.
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