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

Late on 4 November, a <a href="https://www.iza.ne.jp/kiji/pressrelease/news/201104/prl20110419160643-n1.html" target="_blank" rel="noopener">press release</a> by an entity called サンシャインＨ号投資事業組合 or Sunshine H Investment Partnership, sponsored by notable Japan-based activist investment manager Strategic Capital and a relatively unknown investment advisor called UGS Asset Management noted their <a href="https://prtimes.jp/a/?f=c-52343-2020110412-405c9baf0e19901ae721830882870a2b.pdf" target="_blank" rel="noopener">intention</a> to launch a Tender Offer to acquire 10.2061mm shares in <a href="https://www.smartkarma.com/entities/keihanshin-building-co-ltd" target="_blank" data-smartkarma-citation="entities:2085:1" rel="noopener">Keihanshin Building (8818 JP)</a>, a building leasing and management company based in Osaka. The Tender Offer Announcement by Strategic Capital is <a href="https://stracap.jp/wp/wp-content/uploads/2020/04/79a979cd2b66174c5fe6b825d6834c1e.pdf" target="_blank" rel="noopener">here</a>. The Tender Offer was officially launched <a href="https://disclosure.edinet-fsa.go.jp/E01EW/BLMainController.jsp?uji.verb=W00Z1020initialize&amp;uji.bean=ek.bean.EKW00Z1020Bean&amp;TID=W00Z1020&amp;PID=W1E63041&amp;SESSIONKEY=1604538650958&amp;lgKbn=2&amp;dflg=0&amp;iflg=null&amp;row=100&amp;idx=0&amp;str=&amp;kbn=1&amp;flg=&amp;syoruiKanriNo=S100K0ST" target="_blank" rel="noopener">today</a>. This Tender Offer follows almost three years of effort (they went above 5% in January 2018) by Strategic Capital - a well-known noisy shareholder - to critique the Keihanshin system of holding cross-holdings in companies which they see as a Keihanshin's method of entrenching their management and directors and supporting other companies to do the same. Strategic made shareholder proposals for the 2020 AGM and launched a website <a href="https://realize-value-keihanshin.com/english/" target="_blank" rel="noopener">https://realize-value-keihanshin.com/english/</a> to go with it which noted that it had put measures up for the AGM asking the company to become a REIT operating company, to transfer assets to realize value, sell cross-holdings to realize value and improve capital efficiency, and they asked for a director, Maruki-san, the head of Strategic Capital. The agenda items they put up were roundly <a href="https://contents.xj-storage.jp/xcontents/AS01818/0955fe4b/7a49/449a/8fab/89fdc66a9d24/20200701094854582s.pdf" target="_blank" rel="noopener">rejected</a>. The best-received measure was the proposal to elect Maruki-san. That was rejected by 78%. Since then they have teamed up with UGS and as of September owned 9.38% of Keihanshin together and as of this morning's Tender Offer announcement it appears they control 9.7%. <div class="content-highlight">It appears they held a press conference yesterday, and have a <a href="https://realize-value-keihanshin.com/wp/wp-content/uploads/2020/11/c2a49119cbbfb3971d578187e0dd2c37.pdf" target="_blank" rel="noopener">presentation</a> prepared for it. Strategic has also set up a page specifically to deal with the Tender Offer at <a href="https://realize-value-keihanshin.com/tenderoffer/" target="_blank" rel="noopener">https://realize-value-keihanshin.com/tenderoffer/</a>.</div>The Tender Offer to buy just under 20% of Keihanshin Building is odd, and opportunistic. It comes at a premium of just over 1%. The stock today has popped well over the Tender Offer Price, but the response will be interesting. That means it is unlikely to get a lot of traction. It is more the case because it requires that 10.2061mm shares to be tendered before they buy any shares (many tender offers of the type have low or no minimum). Weirder than that, it seems particularly designed to fail UNLESS cross-holders get involved.The stock was up 13.8% today. Discussion continues below.

Late on 4 November, a press release by an entity called サンシャインＨ号投資事業組合 or Sunshine H Investment Partnership, sponsored by notable Japan-based activist investment manager Strategic Capital and a relatively unknown investment advisor called UGS Asset Management noted their intention to launch a Tender Offer to acquire 10.2061mm shares in Keihanshin Building (8818 JP), a building leasing and management company based in Osaka. The Tender Offer Announcement by Strategic Capital is here. The Tender Offer was officially launched today. This Tender Offer follows almost three years of effort (they went above 5% in January 2018) by Strategic Capital - a well-known noisy shareholder - to critique the Keihanshin system of holding cross-holdings in companies which they see as a Keihanshin's method of entrenching their management and directors and supporting other companies to do the same. Strategic made shareholder proposals for the 2020 AGM and launched a website https://realize-value-keihanshin.com/english/ to go with it which noted that it had put measures up for the AGM asking the company to become a REIT operating company, to transfer assets to realize value, sell cross-holdings to realize value and improve capital efficiency, and they asked for a director, Maruki-san, the head of Strategic Capital. The agenda items they put up were roundly rejected. The best-received measure was the proposal to elect Maruki-san. That was rejected by 78%. Since then they have teamed up with UGS and as of September owned 9.38% of Keihanshin together and as of this morning's Tender Offer announcement it appears they control 9.7%. It appears they held a press conference yesterday, and have a presentation prepared for it. Strategic has also set up a page specifically to deal with the Tender Offer at https://realize-value-keihanshin.com/tenderoffer/.The Tender Offer to buy just under 20% of Keihanshin Building is odd, and opportunistic. It comes at a premium of just over 1%. The stock today has popped well over the Tender Offer Price, but the response will be interesting. That means it is unlikely to get a lot of traction. It is more the case because it requires that 10.2061mm shares to be tendered before they buy any shares (many tender offers of the type have low or no minimum). Weirder than that, it seems particularly designed to fail UNLESS cross-holders get involved.The stock was up 13.8% today. Discussion continues below. 

Opportunistic Keihanshin (8818) Tender Offer Designed to Fail