IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

Smartkarma North Asia Weekly: Samsung Electronics, LG Electronics, Shinsei Bank, 2021 IPOs Worldwide

Huifu Payment IPO Preview: Peel Back the Layers to Unearth the True Picture

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/huifu-payment-ltd" target="_blank" data-smartkarma-citation="entities:27145:1" rel="noopener">Huifu Payment Limited (1806 HK)</a> is a leading Chinese independent third-party payment service provider which listed on 15 June 2018 to raise net proceeds of HK$1,592.5 million ($205 million) at a market cap of HK$9,386 ($1.2 billion). However, the IPO proved to be disastrous with the shares never trading above the IPO price. </p><p>On Wednesday, Huifu announced a management-led privatisation offer. The offer includes a cash alternative (HK$3.50 cash per scheme share) and a share alternative (2.709677 new shares in the offeror per scheme share). The cash offer price of HK$3.50 per share is a 26.81% premium to the last trading price of HK$2.76 per share (17 December prior to the trading halt). However, the cash offer price is 53% below the IPO price of HK$7.50 per share. </p><div class="content-highlight"><p>The key conditions precedent are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). The offeror and concert parties represent 229.6 million shares or 17.61% of shares outstanding. Disinterested scheme shareholders represent 1,073.6 million shares or 82.39% of shares outstanding which implies the 10% blocking stake is 107.4 million shares or 8.24% of shares outstanding. Due to the combination of the irrecovables and the opportunity for shareholders to exit a poorly performing IPO investment, we believe that the privatisation bid will succeed.  </p></div>

Huifu Payment Limited (1806 HK) is a leading Chinese independent third-party payment service provider which listed on 15 June 2018 to raise net proceeds of HK$1,592.5 million ($205 million) at a market cap of HK$9,386 ($1.2 billion). However, the IPO proved to be disastrous with the shares never trading above the IPO price. On Wednesday, Huifu announced a management-led privatisation offer. The offer includes a cash alternative (HK$3.50 cash per scheme share) and a share alternative (2.709677 new shares in the offeror per scheme share). The cash offer price of HK$3.50 per share is a 26.81% premium to the last trading price of HK$2.76 per share (17 December prior to the trading halt). However, the cash offer price is 53% below the IPO price of HK$7.50 per share. The key conditions precedent are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). The offeror and concert parties represent 229.6 million shares or 17.61% of shares outstanding. Disinterested scheme shareholders represent 1,073.6 million shares or 82.39% of shares outstanding which implies the 10% blocking stake is 107.4 million shares or 8.24% of shares outstanding. Due to the combination of the irrecovables and the opportunity for shareholders to exit a poorly performing IPO investment, we believe that the privatisation bid will succeed.  

Huifu Payments’ Management Led Privatisation Bid