This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering
- SENKO Group Holdings Co., Ltd. (9069 JP) today announced large financial institutional cross-holders would sell shares in a Secondary Offering. There’s a buyback on the back end.
- Cross-Holding unwinding is the subject of the moment. It will continue to be so. It will involve selldowns, and buybacks. Study the model of what companies must do what.
- In this case, Senko has a LOT of cross-holders and minimal excess cash. So investors buy more shares. But there is a buyback and index demand to come.
2. Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out
- Today after the close, KDDI Corp (9433 JP) and Gree Inc (3632 JP) announced that KDDI would offer its 8,000,000 shares in Gree in an international offering through Mizuho Intl.
- The deal comes at a decently large discount and the stock is quite downtrodden. Especially when compared to its venture assets and cash, assuming invested amount is remotely viable.
- The problem is that too much of revenue isn’t earning much, so this sits in a Value Trap category. Shareholder structure makes it difficult to do buybacks.
3. Heiwado (8276 JP) – Banks and Insurers Unwinding Cross-Holdings In Offering
- Heiwado Co Ltd (8276 JP) today announced a Secondary Offering sell-down by cross-holders, combined with a buyback post-offering to mitigate some of the effects of overhang.
- Banks and insurers are selling, and that will leave the stock with a lot of cross-holders left, but investors should look at the model given he zeitgeist.
- Companies with lots of cross-holders have to be “fair” to them. Those without copious cash have to spread it around so this transaction model looks likely to be continued.
4. Initial Thoughts on the Webtoon Entertainment IPO
- Naver Corp (035420 KS) is trying to complete the IPO of its affiliate Webtoon Entertainment in the US stock market as early as June 2024.
- The expected value of Webtoon Entertainment (post IPO) is about US$3 billion to US$4 billion. Webtoon Entertainment is seeking to raise about US$500 million in this IPO.
- The IPO of Webtoon Entertainment in the US is likely to have a positive impact on Naver Corp (035420 KS).
5. Azure Minerals Block – Removal of Overhang but Still a Risky Bet
- Mineral Resources (MIN AU) is looking to raise up to A$229m (US$150m) via a secondary block trade in Azure Minerals (AZS AU), which will be a clean-up.
- The deal is a large one to digest, at approximately 51.6 days of three month ADV and 13.8% of current mcap.
- In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.
6. Union Bank of India QIP – Well-Flagged and Just in Time for Index Inclusion
- Union Bank Of India (UNBK IN) is looking to raise up to US$370m (INR30bn) via its QIP.
- The company last undertook a QIP in Aug 2023, which we covered in Union Bank of India QIP – Well-Flagged Deal, Recent Momentum Has Been Strong.
- This deal too is a very well flagged one, with the firm having earlier reported that it would look to do a QIP to boost its free float and capital.
7. Trial Holdings Pre-IPO – Refiling Updates – Margin Uptick, More Golf Courses
- Trial Holdings (5882 JP) (TH) is now looking to raise around US$234m in its Japan IPO, after having canceled its prior listing attempt last year.
- TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
- We have looked at the past performance in our previous notes. In this note, we talk about the updates from its recent filings.
8. Orica Placement – Keeping the Acquisition Momentum Going
- Orica Ltd (ORI AU) is looking to raise up to A$400m (US$260m) in its primary placement. The proceeds will be used to partially fund the acquisition of Cyanco.
- The deal is a large one to digest, representing 21.3 days of three month ADV and 5.2% dilution.
- In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.
9. ECM Weekly (19th Feb 2024) – Toei Ani, KB Fin, IIF, Trial, Juniper, Bharti Hexacom, Octillion Energy
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, Trial Holdings (5882 JP) was back in the market, a year after ditching its previous attempt, while Juniper Hotels is trying to ride the India wave.
- For placements, more signs of REIT coming back to life, this time in Japan. A relatively large deal in Toei Animation (4816 JP) as well was launched.
10. Amman Mineral International Lockup Expiry – Large Lockup Expiry, Sitting on Sizeable Profits
- Amman Mineral Internasional (AMMN IJ) raised around US$714m in its Indonesia IPO, after pricing the deal at IDR1,695/share. Its eight-month lockup will expire on 21st Feb 2024.
- Amman Mineral International (AMI) carries out exploration, development, mining, and processing. The company operates an open pit copper and gold mine known as the Batu Hijau mine in Indonesia.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
