Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

Crucialtec Rights Offer: Arb Trading Status

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/9794" target="_blank" data-smartkarma-citation="entities:9794:1">Crucialtec (114120 KS)</a>, a tiny tech company (US$60M) but once one of the rising stars in the Korean tech scene, offers a total 2M common shares for ₩22.4bil. Per share allocation is 0.4378529.</li>
<li>Nov 5 was for preliminary pricing. Offer was preliminarily priced at ₩1,120, which means the final offer price wouldn't be higher than this ₩1,120. Subscription rights trade will begin on Nov 26 and runs until Nov 30. Final pricing will be done on Dec 5.</li>
<li>This is a tiny cap stock (US$60M). Liquidity may be an issue for many arb traders. In fact, many of local institutions are simply ignoring this event. Moreover, its business is currently in a bad shape. The current price is 62.3% off 52W high.</li>
<li>But because of this, there is a very good chance that subscription rights will be traded at a bargain. Korea is one of the few markets that allow short sellers to participate in a rights offer. This may be an easy arb target, just on a small scale. Of course, borrowing/liquidity can be an issue.</li>
</ul>



Crucialtec (114120 KS), a tiny tech company (US$60M) but once one of the rising stars in the Korean tech scene, offers a total 2M common shares for ₩22.4bil. Per share allocation is 0.4378529.
Nov 5 was for preliminary pricing. Offer was preliminarily priced at ₩1,120, which means the final offer price wouldn't be higher than this ₩1,120. Subscription rights trade will begin on Nov 26 and runs until Nov 30. Final pricing will be done on Dec 5.
This is a tiny cap stock (US$60M). Liquidity may be an issue for many arb traders. In fact, many of local institutions are simply ignoring this event. Moreover, its business is currently in a bad shape. The current price is 62.3% off 52W high.
But because of this, there is a very good chance that subscription rights will be traded at a bargain. Korea is one of the few markets that allow short sellers to participate in a rights offer. This may be an easy arb target, just on a small scale. Of course, borrowing/liquidity can be an issue.


Crucialtec Rights Offer: Possibly Easy Arb Target, Just on a Small Scale