Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Not Much Time Left for Adani Power Delisting Offer

The End of Parabolic Moves for Adani Group Companies?

Adani Power - The Next Delisting/Exit Offer?

Indian Delisting/Exit Offers - Know Your Process and The Games Played

Quiddity Advisors

Event-Driven

<p>On 31 May I wrote about the proposal from the <a href="https://www.smartkarma.com/entities/adani-power-ltd" target="_blank" data-smartkarma-citation="entities:247:1" rel="noopener">Adani Power Ltd (ADANI IN)</a> promoter group to take the Company private through a Delisting Offer, a measure that obtained shareholder approval, as expected, on 25 June.</p><p>While the eventually unsuccessful delisting offer of <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> and the eventually successful delisting offer for <a href="https://www.smartkarma.com/entities/hexaware-technologies-ltd" target="_blank" data-smartkarma-citation="entities:7882:1" rel="noopener">Hexaware Technologies (HEXW IN)</a> took the spotlight, Adani Power effectively languished for months. </p><p>I had, interestingly enough, been talking about this to people who would listen. It has been something of a no-brainer to me because...</p><ol style="list-style-type: lower-alpha;">
<li>As it was trading in the INR 35-36 area in July and August, then again in September to early November, it was trading VERY cheap on an option basis. With such a very high debt/EBITDA ratio, buying the company at a premium to then-current EV/EBITDA multiple required a large jump in price. </li>
<li>There was no premium being applied despite improvements in the positioning of IPPs in India. </li>
</ol><p>When <a href="https://www.adanipower.com/newsroom/media-releases/Adani-Power-announces-Q2-FY21-results" target="_blank" rel="noopener">Q2 Results</a> came out on 5 November (<a href="https://www1.nseindia.com/corporate/ADANIPOWER_06112020195030_Intimation06112020.pdf" target="_blank" rel="noopener">Q2 presentation 6 Nov</a>) much better than the market expected (revenues +29%yoy, consolidated EBITDA +126%yoy, PBT up 18-fold), the stock got a pop.  But it did not last long. The one-off nature of the regulatory (Appellate Tribunal Of Electricity (APTEL)) approvals of Adani Power Maharashtra Ltd’s claims for coal shortfall compensation and carrying costs meant the company's Q2 profits were less than exciting on their own, despite signs of stronger Average Plant Load Factor levels ahead. </p><p>On a media call early Thursday 6 November, the MD and CEO of Adani Transmission and the MD of Thermal Power at Adani Power said that the delisting process "is in process", saying they have approval from six lenders, and other lenders would also like to approve. </p><p>But the stock did not move much.</p><h3>Then Things Changed</h3><p>Things have been somewhat quiet since then, but this past week, things got exciting. The company won a short-term contract to supply 6,100MW of electricity to the Punjab Govt.</p><div class="content-highlight"><p><strong>And....   Adani Power shares rose 54.8% this past week (in four trading days), in fabulous volumes.</strong></p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/176/665/original/Screenshot%202020-12-06%20at%2012.33.14%20PM.png?1607229262" class="editor-image img-responsive" data-smartkarma-image-id="176665"></figure></section><div class="content-highlight">
<p>That leaves us with questions about the Delisting Offer Reverse Book Build to come.</p>
<p>And given the shareholder structure, the questions are understandable. </p>
</div><p>More discussion below.</p>

On 31 May I wrote about the proposal from the Adani Power Ltd (ADANI IN) promoter group to take the Company private through a Delisting Offer, a measure that obtained shareholder approval, as expected, on 25 June.While the eventually unsuccessful delisting offer of Vedanta Ltd (VEDL IN) and the eventually successful delisting offer for Hexaware Technologies (HEXW IN) took the spotlight, Adani Power effectively languished for months. I had, interestingly enough, been talking about this to people who would listen. It has been something of a no-brainer to me because...
As it was trading in the INR 35-36 area in July and August, then again in September to early November, it was trading VERY cheap on an option basis. With such a very high debt/EBITDA ratio, buying the company at a premium to then-current EV/EBITDA multiple required a large jump in price. 
There was no premium being applied despite improvements in the positioning of IPPs in India. 
When Q2 Results came out on 5 November (Q2 presentation 6 Nov) much better than the market expected (revenues +29%yoy, consolidated EBITDA +126%yoy, PBT up 18-fold), the stock got a pop.  But it did not last long. The one-off nature of the regulatory (Appellate Tribunal Of Electricity (APTEL)) approvals of Adani Power Maharashtra Ltd’s claims for coal shortfall compensation and carrying costs meant the company's Q2 profits were less than exciting on their own, despite signs of stronger Average Plant Load Factor levels ahead. On a media call early Thursday 6 November, the MD and CEO of Adani Transmission and the MD of Thermal Power at Adani Power said that the delisting process "is in process", saying they have approval from six lenders, and other lenders would also like to approve. But the stock did not move much.Then Things ChangedThings have been somewhat quiet since then, but this past week, things got exciting. The company won a short-term contract to supply 6,100MW of electricity to the Punjab Govt.And....   Adani Power shares rose 54.8% this past week (in four trading days), in fabulous volumes.
That leaves us with questions about the Delisting Offer Reverse Book Build to come.
And given the shareholder structure, the questions are understandable. 
More discussion below.

ADANI POWER On the Move - Fundamentals Better and Delisting Offer Imminent But... There Are RISKS...