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

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

Adani Power - The Next Delisting/Exit Offer?

Quiddity Advisors

Event-Driven

<p>In late May 2020, <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> received a proposal from its promoters to take it private through a Delisting Offer process (discussed in <a href="https://www.smartkarma.com/insights/adani-power-the-next-delisting-exit-offer" target="_blank" data-smartkarma-citation="insights:39894" rel="noopener">Adani Power - The Next Delisting/Exit Offer?</a>). It was duly put in front of the Board and then in front of shareholders who approved taking things forward through a Postal Ballot which was <a href="https://www.bseindia.com/stock-share-price/adani-power-ltd/adanipower/533096/voting-results/" target="_blank" rel="noopener">approved</a> 23 July 2020. </p><p>The parameters for Delisting Offers are outlined in the SEBI Delisting Regulations (<a href="https://www.sebi.gov.in/legal/regulations/jul-2019/securities-and-exchange-board-of-india-delisting-of-equity-shares-amendment-regulations-2019_43822.html" target="_blank" rel="noopener">Amended 2019</a>). Generally, the schedules are somewhat non-regulated at the beginning and heavily regulated at the end, but there is one period of time in the process which has significant flex, and that is the time between the shareholder approval for the Delisting Offer and the application to the Exchange to conduct the Delisting Offer. The maximum wait between one and the other is one year. That deadline is coming up on 23 July. </p><p>IPOed in 2009, the stock skyrocketed, then fell sharply as the promise did not fulfill itself, and the shares traded down to Rs. 30/share by 2013, then in a Rs 20-40/share range from mid-2015 for the next three years. There was a brief pop to the Rs 50-60 range at the end of 2018 where it stayed until early 2020. The stock broke Rs 50 on the way lower on 28 Feb and traded most of April below Rs 30/share. </p><p>Because the Floor Price of any Offer be determined by Regulation 8 of the <a href="https://www.sebi.gov.in/legal/regulations/apr-2017/sebi-substantial-acquisition-of-shares-and-takeovers-regulations-2011-last-amended-on-march-6-2017-_34693.html" target="_blank" rel="noopener">SEBI </a><a href="https://www.sebi.gov.in/legal/regulations/apr-2017/sebi-substantial-acquisition-of-shares-and-takeovers-regulations-2011-last-amended-on-march-6-2017-_34693.html" target="_blank" rel="noopener">(Substantial Acquisition of Shares and Takeovers) Regulations, 2011</a>, generally promoters wait until the average price is low and starts going higher before they make a proposal for delisting. In this case, the average was in the low Rs 30s range. </p><p>The original proposal cited several reasons why the Proposal should be accepted. </p><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/210/924/original/Delisting+Reasons+Adani.png?1622703412" class="editor-image img-responsive" data-smartkarma-image-id="210924"></figure><div class="content-caption">source: <a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/b45ba492-c58a-4d04-b744-ff4d63578ed7.pdf" target="_blank" rel="noopener">Delisting Proposal Board Meeting Intimation</a>
</div></section><p>These reasons cited were, as I noted a year ago, blatherskite, tarradiddle, trumpery, and hogwash. All of them. But it was a good buy. Then, at the end of March, I wrote <a href="https://www.smartkarma.com/insights/adani-power-how-much-is-too-much" target="_blank" data-smartkarma-citation="insights:49665" rel="noopener">Adani Power: How Much Is Too Much?</a> and figured it was OK to take money off the table. </p>
<p>The question one has to ask now is... is it?  Is there more? <em>Should there be</em> more? </p>
<p>There was an excellent reason to buy in the Rs.30s. The Rs.60s were not <em>that</em> much more expensive. At Rs. 100/share one is getting into more elevated territory, and one has to have questions about the shareholder structure - as one should about most of the listed entities in the group.</p>
<p>More below the fold. </p></section>

In late May 2020, Adani Power Ltd (ADANI IN) received a proposal from its promoters to take it private through a Delisting Offer process (discussed in Adani Power - The Next Delisting/Exit Offer?). It was duly put in front of the Board and then in front of shareholders who approved taking things forward through a Postal Ballot which was approved 23 July 2020. The parameters for Delisting Offers are outlined in the SEBI Delisting Regulations (Amended 2019). Generally, the schedules are somewhat non-regulated at the beginning and heavily regulated at the end, but there is one period of time in the process which has significant flex, and that is the time between the shareholder approval for the Delisting Offer and the application to the Exchange to conduct the Delisting Offer. The maximum wait between one and the other is one year. That deadline is coming up on 23 July. IPOed in 2009, the stock skyrocketed, then fell sharply as the promise did not fulfill itself, and the shares traded down to Rs. 30/share by 2013, then in a Rs 20-40/share range from mid-2015 for the next three years. There was a brief pop to the Rs 50-60 range at the end of 2018 where it stayed until early 2020. The stock broke Rs 50 on the way lower on 28 Feb and traded most of April below Rs 30/share. Because the Floor Price of any Offer be determined by Regulation 8 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, generally promoters wait until the average price is low and starts going higher before they make a proposal for delisting. In this case, the average was in the low Rs 30s range. The original proposal cited several reasons why the Proposal should be accepted. source: Delisting Proposal Board Meeting Intimation
These reasons cited were, as I noted a year ago, blatherskite, tarradiddle, trumpery, and hogwash. All of them. But it was a good buy. Then, at the end of March, I wrote Adani Power: How Much Is Too Much? and figured it was OK to take money off the table. 
The question one has to ask now is... is it?  Is there more? Should there be more? 
There was an excellent reason to buy in the Rs.30s. The Rs.60s were not that much more expensive. At Rs. 100/share one is getting into more elevated territory, and one has to have questions about the shareholder structure - as one should about most of the listed entities in the group.
More below the fold. 

Not Much Time Left for Adani Power Delisting Offer