This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. 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.
2. 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.
3. Timee Pre-IPO – Thoughts on Valuation – Primed for a Decent Upside at the Current Range
- Timee Inc (215A JP) is looking to raise US$290m in its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
- Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
- In an earlier note, we looked at the firm’s past performance and peer comparison. In this note, we discuss our thoughts on valuation.
4. 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.
5. HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
- Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance.
- As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big.
- The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.
6. 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.
7. ECM Weekly (8th July 2024) – Japan Cross-Shareholding, Honda, Aisin, Timee, Chenqi, Cirrus, Emcure
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, we looked at the recently launced offerings of Timee Inc , Chenqi Technology Limited and Cirrus Aircraft.
- On the placement front, this week too was dominated by the cross-shareholding unwinds, this time in Honda Motor (7267 JP).
8. Trading Strategy of Shift Up on the First Day of IPO
- In this insight, we discuss a trading strategy for Shift Up which starts trading on 11 July. Shift Up is one of the most anticipated IPOs in Korea this year.
- Our base case (6 months – 1 year) target price of Shift Up is 95,510 won, which is 59% higher than the IPO price.
- We recommend investors to take some profits (about 50% of invested capital) if the share price shoots higher by 100% or more from the IPO price on the first day.
9. Kelun-Biotech IPO Lock-Up Expiry – Strong Performance Leaves Pre-IPO Investors with Large Gains
- Kelun Biotech (KB) raised around US$170m in its IPO in July 2023, the lockup on its pre-IPO shareholders is set to expire soon.
- KB is a China-based integrated innovative biopharmaceutical company. It has accumulated more than ten years of experience in antibody drug conjugates (ADC) development.
- In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.
10. ASICS (7936 JP): A US$1.4 Billion Secondary Offering
- ASICS Corp (7936 JP) has announced a secondary offering of up to 85.0 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY218 billion (US$1.4 billion).
- Asics’ goal with the secondary offering is to eliminate cross-shareholdings. Asics also announced a material upgrade to full-year forecasts to offset the impact of the offering.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 23 and 26 July (likely 23 July).
