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

Shoko (8090 JP) TOB:  Still Looks Bumpity

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/shoko-co-ltd" target="_blank" data-smartkarma-citation="entities:1167:1" rel="noopener">Shoko Co Ltd (8090 JP)</a> is a trading company which deals in fertilizers and chemicals and is the consolidated subsidiary of <a href="https://www.smartkarma.com/entities/showa-denko-k-k" target="_blank" data-smartkarma-citation="entities:1496:1" rel="noopener">Showa Denko K.K. (4004 JP)</a>. Shoko is undergoing a transformation/restructuring as part of its Swing-by Mid-Term Management Plan (is any Japanese company ever NOT going through some kind of transformative effort?).
This is an LBO of sorts, done with the agreement of Showa Denko, which after its purchase of the Hitachi Chemicals business almost a year ago has better things to do.
It is being taken over by a PE project fund, and Showa Denko is keeping 15% and involving itself with a shareholder agreement and involvement on choosing directors going forward. 
The deal requires only 51.8% of shares out, of which Showa Denko provides 29%. It needs 22% of the other 56% outstanding. It basically all has to come from domestic passive, some small measure of crossholders, and retail. Foreigners own almost nothing. 
But this, like many other deals, is being done at the wrong price. The TOB price is at a tiny premium, and the effective Adjusted EV/EBITDA multiple (EV adjusted for securities holdings and net receivables) is too low.
More below the fold.

Shoko Co Ltd (8090 JP) is a trading company which deals in fertilizers and chemicals and is the consolidated subsidiary of Showa Denko K.K. (4004 JP). Shoko is undergoing a transformation/restructuring as part of its Swing-by Mid-Term Management Plan (is any Japanese company ever NOT going through some kind of transformative effort?).
This is an LBO of sorts, done with the agreement of Showa Denko, which after its purchase of the Hitachi Chemicals business almost a year ago has better things to do.
It is being taken over by a PE project fund, and Showa Denko is keeping 15% and involving itself with a shareholder agreement and involvement on choosing directors going forward. 
The deal requires only 51.8% of shares out, of which Showa Denko provides 29%. It needs 22% of the other 56% outstanding. It basically all has to come from domestic passive, some small measure of crossholders, and retail. Foreigners own almost nothing. 
But this, like many other deals, is being done at the wrong price. The TOB price is at a tiny premium, and the effective Adjusted EV/EBITDA multiple (EV adjusted for securities holdings and net receivables) is too low.
More below the fold. 

Shoko (8090 JP) Tender Offer - Showa Denko Sells Too Cheap. Looks Bumpity.