Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of IPO & Placements for Aequitas Research. At Aequitas we cover all IPOs and placements across Asia-Pac with a deal size of at least US$100m. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%. 
Prior to Aequitas. I was heading Content Strategy for Smartkarma, along with covering IPOs & Placement. In an earlier life I have covered ASEAN property and the banking space in India.

Head of Research, IPOs & Placements

SONY:  Horrible way to announce an investment, but NOT likely a takeover of Sony Financial

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Sony plans to raise US$2.5bn through an issuance of primary shares via a global follow-on offering. Our fellow insight provider <a href="http://www.smartkarma.com/insight_providers/39" target="_blank">Travis Lundy</a>, covered most aspects of the deal in his initial write-up, which you can find <a href="http://www.smartkarma.com/insights/bd0c00de-7e5f-475f-ab23-1a2bd735514a" target="_blank">here</a>. We've run the deal through our framework and the deal scores a mixed bag response, with its past year performance and analyst's bullishness leading to a marginally positive momentum score, while its not so splendid long term track record and valuations being in-line with peers, results in a marginally negative score for long-term/value investors.In our view, we would be inclined to take the deal given: the stock has had time to digest news about the deal and seems to be holding steady after the initial sell down (has performed in-line with the market post the initial sell down); Sony stock has done quite well in the recent past owing to signs of a turnaround and a successful capital raise will likely build on this momentum; in addition, while it is a big deal overall (raising close to USD4bn total, including over-allotment and CB issuance), however, the number of shares being placed is less than 10 days trading volume, thus, its not that big a deal in terms of daily trading volumes of Sony, and hence, it should not be too difficult to digest. On the flip side, as Travis pointed out, the company doesn't seem to require the cash from the equity issuance, and the use of proceeds to takeover Sony Financials looks unlikely. Thus, even if the deal goes through there is unlikely to be any immediate accretion to earnings. Moreover, given the state of the China/HK markets and the sentiment flow through to other markets in the region, this isn't exactly the best week to be marketing a new deal to investors and hence, needless to say, any cut in deal size will end up having a negative impact on the stock, in the near term.

Sony plans to raise US$2.5bn through an issuance of primary shares via a global follow-on offering. Our fellow insight provider Travis Lundy, covered most aspects of the deal in his initial write-up, which you can find here. We've run the deal through our framework and the deal scores a mixed bag response, with its past year performance and analyst's bullishness leading to a marginally positive momentum score, while its not so splendid long term track record and valuations being in-line with peers, results in a marginally negative score for long-term/value investors.In our view, we would be inclined to take the deal given: the stock has had time to digest news about the deal and seems to be holding steady after the initial sell down (has performed in-line with the market post the initial sell down); Sony stock has done quite well in the recent past owing to signs of a turnaround and a successful capital raise will likely build on this momentum; in addition, while it is a big deal overall (raising close to USD4bn total, including over-allotment and CB issuance), however, the number of shares being placed is less than 10 days trading volume, thus, its not that big a deal in terms of daily trading volumes of Sony, and hence, it should not be too difficult to digest. On the flip side, as Travis pointed out, the company doesn't seem to require the cash from the equity issuance, and the use of proceeds to takeover Sony Financials looks unlikely. Thus, even if the deal goes through there is unlikely to be any immediate accretion to earnings. Moreover, given the state of the China/HK markets and the sentiment flow through to other markets in the region, this isn't exactly the best week to be marketing a new deal to investors and hence, needless to say, any cut in deal size will end up having a negative impact on the stock, in the near term.  

Deal rationale remains unclear but we would be inclined to take a leap of faith 

Sony Corp

Deal rationale remains unclear but we would be inclined to take a leap of faith