Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

HDC Demerger - Local Institutions Trade Pattern Checkup & Short-Term Yield Calculations

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/9592" target="_blank" data-smartkarma-citation="entities:9592:1">SeAH Steel Holdings (003030 KS)</a> just announced a tender offer to SeAH Steel (306200 KS) shareholders. Holdings targets a total 1.45M common shares (₩86.6bil). This represents 51.12% of the outstanding shares of the target company.</li>
<li>Tendering target is 51.12%. The major shareholder has a combined 47.64%. But only a 35.53% stake owned by the Lee Ju-seong family will likely be swapped. That is, we may have a room of about 30% of the target for arb traders to sneak in.</li>
<li>Similarly to the recent tender events in Korea, the owner side needs help from outsiders (arb traders) to hit the target, albeit not greatly. So again, this suggests we may see spread openings during the tendering period right after Holdings swap price is set on Dec 3.</li>
<li>Common sense tells us that the major shareholder will try to further press done Holdings price in an effort to get a better swap ratio. This is a clear cut case of the major shareholder in need of securing a favorable swap ratio. So, a long/short pair trade doesn't seem to be a bad idea to me either.</li>
</ul>



SeAH Steel Holdings (003030 KS) just announced a tender offer to SeAH Steel (306200 KS) shareholders. Holdings targets a total 1.45M common shares (₩86.6bil). This represents 51.12% of the outstanding shares of the target company.
Tendering target is 51.12%. The major shareholder has a combined 47.64%. But only a 35.53% stake owned by the Lee Ju-seong family will likely be swapped. That is, we may have a room of about 30% of the target for arb traders to sneak in.
Similarly to the recent tender events in Korea, the owner side needs help from outsiders (arb traders) to hit the target, albeit not greatly. So again, this suggests we may see spread openings during the tendering period right after Holdings swap price is set on Dec 3.
Common sense tells us that the major shareholder will try to further press done Holdings price in an effort to get a better swap ratio. This is a clear cut case of the major shareholder in need of securing a favorable swap ratio. So, a long/short pair trade doesn't seem to be a bad idea to me either.


SeAH Steel Holdings Tender Offer: Summary & Trading Opportunities