IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p>After much media speculation, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> finally showed its hand by proposing that <a href="https://www.smartkarma.com/entities/huya-inc" target="_blank" data-smartkarma-citation="entities:26983:1" rel="noopener">HUYA Inc (HUYA US)</a> and <a href="https://www.smartkarma.com/entities/douyu-international-hold-adr" target="_blank" data-smartkarma-citation="entities:28045:1" rel="noopener">Douyu International Holdings (DOYU US)</a> enter a stock-for-stock merger. Under the plan, Huya would acquire DouYu in exchange for newly issued Class A ordinary shares of Huya. The exchange ratio will be mutually agreed among Tencent, the independent members of the Huya and DouYu Board.  </p><p>Tencent also announced that it has entered into a share transfer agreement with <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a> and Mr Rongjie Dong (Huya’s CEO) to purchase 30 million and 1 million Class B ordinary shares of Huya, respectively.  The transfers will be completed on or before 9 September, resulting in Tencent's owning 51.0% of Huya's outstanding shares and 70.4% of the voting power. </p><div class="content-highlight"><p>Tencent is also the DouYu’s largest shareholder and owns 38.0% of the outstanding shares and voting power. With Tencent owning more than two-thirds of the votes in Huya, the approval of the merger largely comes down to securing the backing of DouYu shareholders. Overall, we think that the merger makes a lot of sense and would get the backing from DouYu’s shareholders, subject to a suitable exchange ratio. </p></div>

After much media speculation, Tencent Holdings (700 HK) finally showed its hand by proposing that HUYA Inc (HUYA US) and Douyu International Holdings (DOYU US) enter a stock-for-stock merger. Under the plan, Huya would acquire DouYu in exchange for newly issued Class A ordinary shares of Huya. The exchange ratio will be mutually agreed among Tencent, the independent members of the Huya and DouYu Board.  Tencent also announced that it has entered into a share transfer agreement with JOYY (YY US) and Mr Rongjie Dong (Huya’s CEO) to purchase 30 million and 1 million Class B ordinary shares of Huya, respectively.  The transfers will be completed on or before 9 September, resulting in Tencent's owning 51.0% of Huya's outstanding shares and 70.4% of the voting power. Tencent is also the DouYu’s largest shareholder and owns 38.0% of the outstanding shares and voting power. With Tencent owning more than two-thirds of the votes in Huya, the approval of the merger largely comes down to securing the backing of DouYu shareholders. Overall, we think that the merger makes a lot of sense and would get the backing from DouYu’s shareholders, subject to a suitable exchange ratio. 

Tencent Sets in Motion a Sensible Huya DouYu Merger