In today’s briefing:
- Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
- Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
- Midea A/H Listing – Strong Demand for Quality Asset, Index Flows Could Help in the near Term
- Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
- Platinum (PTM AU): Regal’s Indicative Offer
- ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- TCM (570 HK): Inching Towards Regulatory Sign-Off
- Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
- Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300
- Pacific Smiles (PSQ AU): Genesis’ Off-Market A$1.90/Share Offer
Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
- The Midea Group (300 HK) IPO is being offered at a price range of HK$52-54.8/share, a discount of 20.9%-25% to Midea Group. That will raise US$3.28bn-US$3.46bn for the company.
- Midea Group (300 HK) will not get Fast Entry to the HSCI but will be added to Southbound Stock Connect on 14 October once the price stabilisation period has ended.
- Midea Group (300 HK) should get Fast Entry to one global index and that could lead to inclusion in the iShares China Large-Cap (FXI) (FXI US) too.
Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
- Media reports indicate that Midea Group (000333 CH) has priced its H-shares IPO at HK$54.8/share, the top of the range. That is a 19.85% discount to the A-shares.
- Reports also indicate that the IPO was oversubscribed multiple times with Hillhouse and GIC putting in large orders. That could result in the Offer Size Adjustment Option being exercised.
- The exercise of the Offer Size Adjustment Option will take the IPO raise to HK$31bn (US$3.98bn) and index inclusion in some of the larger indices will become a lot easier.
Midea A/H Listing – Strong Demand for Quality Asset, Index Flows Could Help in the near Term
- Midea Group Co Ltd A (000333 CH) raised around US$4.6bn in its H-share listing (including over-allocation), after the deal was upsized.
- Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
- We have covered the deal background in our previous notes. In this note, we talk about the trading dynamics.
Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
- Logistics takeovers are hot this year. Any cutting-edge-of-efficiencies business in the space is likely to get a look. Trancom Co Ltd (9058 JP) is one.
- But while logistics assets put into bidding competition like Alps Logistics and Chilled & Frozen get high EV/EBITDA multiples, MBO transactions without competition get done too cheaply.
- Here again, an “Value Activist” “selling into the bid” to reinvest in the levered back end (at the takeover price). That tells you this deal is being done too cheaply.
Platinum (PTM AU): Regal’s Indicative Offer
- Platinum Asset Management (PTM AU) has confirmed, and is “considering the merits” of an unsolicited confidential, non-binding, indicative proposal from Regal Partners (RPL AU).
- Regal has offered, by way of a Scheme, 0.274 Regal shares for every Platinum share. A $0.24/share special dividend is permitted, and added. Regal holds an estimated 5.1% stake.
- With funds under management down 27% yoy, a merger with Regal is just the tonic for Platinum’s long-suffering investors. Founder Kerr Neilson, holding 21.7%, will have the final say.
ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
- Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
- There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.
TCM (570 HK): Inching Towards Regulatory Sign-Off
- In its latest monthly update, China Traditional Chinese Medicine (570 HK) fleshes out the latest on the various PRC regulatory applications.
- Comparing the two most recent monthly updates side-by-side, apart from modifying the documentation for the MOC and NDRC process; the SAMR filing has been formally accepted, as previously flagged.
- The upshot? These regulatory approvals will be secured. The key question is whether this can take place before the 18th October pre-condition long stop date. Or an extension is required.
Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
- KOSDAQ stocks are expected to make up 10-15% of the Value-Up Index, with 10-15 names benefiting. Even with smaller passive funds, the impact on these stocks could be significant.
- KOSDAQ Global Index criteria overlap with the Value-Up Index, and KRX’s push suggests many KOSDAQ Global stocks will also appear in the Value-Up Index.
- In the past 30 days, the KOSDAQ Global Index dropped 5.14%, but 5 of the top 10 gainers either announced value-ups or received value-up picks from brokers.
Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300
- Trancom Co Ltd (9058 JP) recommended a Bain-sponsored MBO at JPY10,300, a 40.5% and 42.9% premium to the last close and undisturbed price, respectively.
- The offer represents an all-time high but is lower than the midpoint of the IFA’s DCF valuation range and implies multiples below precedent transaction multiples.
- While the Dalton irrevocable has a counteroffer clause, Mr Takebe (the largest shareholder) does not. Therefore, there is a low probability of a competing bidder emerging.
Pacific Smiles (PSQ AU): Genesis’ Off-Market A$1.90/Share Offer
- After Crescent Capital ‘s National Dental Care’ (NDC) A$2.05/share Offer, by way of Scheme, failed on the 9 August. it was just a question of when Genesis re-loaded its Offer.
- Genesis has now announced a A$1.90/share off-market Offer ( its 29 July A$1.90/share approach was a Scheme), conditional on a 90% minimum acceptance. Pricing falls within the IE’ fair value range.
- Pacific Smiles (PSQ AU)‘s board previously gave unanimous support for NDC’s prior A$1.90/share Offer. The question is whether the 90% hurdle is met. I think it will.
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