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

Quiddity Advisors

Event-Driven

On Friday 5 March, 2021, Bain Capital and the entity formed by itself, the CTO, and the President of <a href="https://www.smartkarma.com/entities/ignis-ltd" target="_blank" data-smartkarma-citation="entities:6124:1" rel="noopener">IGNIS Ltd (3689 JP)</a> announced they would launch a Tender Offer to buy out the minorities in the company. They call this an MBO and it is one of the clearest examples of an MBO in recent memory. 
Management will own 70% of the resulting company, and Bain will own the rest.
At a 63% premium to last trade, it is reasonably generous. But it didn't have to be. Like many Japanese MBOs and buyouts, the bidders came in with a low-ball bid and the Board/Special Committee dutifully responded by saying they wanted more. This time, the lowball bid was below the previous day's close when they made it so it was a pretty healthy lowball. 
The price they got to was 58% higher than the first lowball offer, which is proof yet again that Boards need to be diligent in fighting back against MBOs. Just because management wants to buy out the company doesn't mean it needs to happen. 
+63% will be a tough thing to fight against, but for a SaaS/online company which itself expects to grow revenues 25% a year for the next several years, and 4yrs from now expects EBITDA margins of nearly 30%, a Takeover EV of 13x that forward EBITDA does not seem outrageously high. 
But it will probably get done.

On Friday 5 March, 2021, Bain Capital and the entity formed by itself, the CTO, and the President of IGNIS Ltd (3689 JP) announced they would launch a Tender Offer to buy out the minorities in the company. They call this an MBO and it is one of the clearest examples of an MBO in recent memory. 
Management will own 70% of the resulting company, and Bain will own the rest.
At a 63% premium to last trade, it is reasonably generous. But it didn't have to be. Like many Japanese MBOs and buyouts, the bidders came in with a low-ball bid and the Board/Special Committee dutifully responded by saying they wanted more. This time, the lowball bid was below the previous day's close when they made it so it was a pretty healthy lowball. 
The price they got to was 58% higher than the first lowball offer, which is proof yet again that Boards need to be diligent in fighting back against MBOs. Just because management wants to buy out the company doesn't mean it needs to happen. 
+63% will be a tough thing to fight against, but for a SaaS/online company which itself expects to grow revenues 25% a year for the next several years, and 4yrs from now expects EBITDA margins of nearly 30%, a Takeover EV of 13x that forward EBITDA does not seem outrageously high. 
But it will probably get done.

IGNIS (3689) MBO +63% Is Probably Too Light