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

Weibo (WB US): Regulatory Risks Overshadow Cheap Valuation And Recapitalization Optionality

Weibo (WB US): Strong Quarter Amid Regulatory Crackdown

Weibo (WB US) Files For Hong Kong Listing

Homecoming For Chinese Companies: Appraisal Rights & Fair Value

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Quiddity Advisors

Event-Driven

On 6 July 2020, <a href="https://www.smartkarma.com/entities/sina-corp-china" target="_blank" data-smartkarma-citation="entities:22691:1" rel="noopener">Sina Corp (Class A) (SINA US)</a> made an <a href="http://ir.sina.com/index.php/static-files/69e95aee-2729-457f-be56-73628090b8ea" target="_blank" rel="noopener">announcement</a> they had received a preliminary non-binding “going private” proposal from New Wave MMXV - a company controlled by its chairman and CEO Charles Chao. The bid was US$41/share. The GlobalTimes had an <a href="https://www.globaltimes.cn/content/1202472.shtml" target="_blank" rel="noopener">article</a> where sources opined Sina would "go home" to list in HK or on the STAR Market. This was followed by an <a href="http://ir.sina.com/static-files/de1ddd0f-354f-42de-9b33-b1bc414ab1b4" target="_blank" rel="noopener">Agreement and Plan of Merger</a> pursuant to which New Wave would acquire all of outstanding ordinary shares not owned at US$43.30/share. Shareholders approved the merger on <a href="http://ir.sina.com/static-files/ea4a5614-30e8-472c-895c-31e120de3261" target="_blank" rel="noopener">23 December</a> 2020.The importance of Sina Corp was that it owned a very large stake in China's premier micro-blogging (twitter-equivalent) service, operated by <a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (Adr) (WB US)</a>. Prior to that EGM, according to <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a>'s excellent write-ups of the deal in <a href="https://www.smartkarma.com/insights/sina-corp-management-buyout-offer" target="_blank" data-smartkarma-citation="insights:41035" rel="noopener">Sina Corp: Management Buyout Offer</a>, and <a href="https://www.smartkarma.com/insights/what-s-going-on-with-sina-corp" target="_blank" data-smartkarma-citation="insights:48344" rel="noopener">What's Going On With Sina Corp?</a> (along with a fabulous initial cut at dissenters' appraisal rights for Chinese companies coming home in <a href="https://www.smartkarma.com/insights/sina-corp-appraisal-rights-and-fair-value" target="_blank" data-smartkarma-citation="insights:41068" rel="noopener">Homecoming For Chinese Companies: Appraisal Rights &amp; Fair Value</a>), Sina had intended to issue written notices of authorization to objecting shareholders (prior to the EGM, <a href="http://ir.sina.com/static-files/722deb54-0426-4b43-a58a-1c8be8b59b61" target="_blank" rel="noopener">21.5mn shares or 35.9%</a> of the outstanding shares of Sina issued notices of objections to the company). The dissenting total was quite high, and could have been a reason for Charles Chao to walk away from the deal, but despite the "requirement" to issue authorization notices by early Feb, there was no public acknowledgment of the situation by SINA until 22 March when the company issued a <a href="https://www.prnewswire.com/news-releases/sina-announces-completion-of-merger-301253197.html" target="_blank" rel="noopener">press release</a> saying the merger had been completed.So that was done.Back in February, the Hong Kong capital markets world was atwitter (woefully bad pun intended) with the news (<a href="https://www.bloomberg.com/news/articles/2021-02-18/china-s-twitter-like-weibo-said-to-plan-hong-kong-second-listing" target="_blank" rel="noopener">Bloomberg</a>, <a href="https://www.reuters.com/world/china/chinas-weibo-hires-banks-hong-kong-secondary-listing-sources-say-2021-02-23/" target="_blank" rel="noopener">Reuters</a>, that <a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (Adr) (WB US)</a>, China's largest micro-blogging service (China twitter) intended to launch a secondary offering in Hong Kong, like many other US ADR-listed Chinese companies, and had hired banks (GS, CLSA, CS) to do so. But since then, there has been no follow-up news. <h2>But There is Now NEW "News"... Which is Not Yet News</h2>Late in the Asia evening on 6 July 2021, Reuters had an <a href="https://www.reuters.com/technology/exclusive-weibo-chairman-state-firm-plan-take-chinas-twitter-private-sources-2021-07-06/" target="_blank" rel="noopener">EXCLUSIVE</a> which said Weibo chairman Charles Chao - with 45% of shares out but 71% of voting rights - would team up with an as-yet unnamed Shanghai-based state firm to take the company private. One goal would be to get <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> out of their 30% stake. Two sources told Reuters the consortium plans to offer $90-100/share.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/217/007/original/Screenshot+2021-07-06+at+8.35.37+PM.png?1625574980" class="editor-image img-responsive" data-smartkarma-image-id="217007"></figure></section>As I wrote that sentence, the shares were indicated +30% at just over US$71/share. My first thought was that the shares would trade "wide" to these early-reported terms as there are political considerations (will the State Council appreciate that a regional SASAC puts up money to buy out an internet firm?), questions about where BABA would agree to sell, timeline, and questions about what Charles Chao and the unnamed Shanghai entity would do if materially all the minorities dissented.As I finish that paragraph, Bloomberg appears to have reached a <a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (Adr) (WB US)</a> spokesperson who says that this rumour is not true. And a while later, we have a Weibo release which offers a pretty strong denial. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/217/010/original/Screenshot+2021-07-06+at+9.39.13+PM.png?1625578767" class="editor-image img-responsive" data-smartkarma-image-id="217010"></figure></section>Of course, that doesn't mean it isn't true. It just means that it isn't true for public consumption yet.But it is a big interesting situation so we take a closer look at the parameters! And the shares opened up 10%.

On 6 July 2020, Sina Corp (Class A) (SINA US) made an announcement they had received a preliminary non-binding “going private” proposal from New Wave MMXV - a company controlled by its chairman and CEO Charles Chao. The bid was US$41/share. The GlobalTimes had an article where sources opined Sina would "go home" to list in HK or on the STAR Market. This was followed by an Agreement and Plan of Merger pursuant to which New Wave would acquire all of outstanding ordinary shares not owned at US$43.30/share. Shareholders approved the merger on 23 December 2020.The importance of Sina Corp was that it owned a very large stake in China's premier micro-blogging (twitter-equivalent) service, operated by Weibo Corp (Adr) (WB US). Prior to that EGM, according to David Blennerhassett's excellent write-ups of the deal in Sina Corp: Management Buyout Offer, and What's Going On With Sina Corp? (along with a fabulous initial cut at dissenters' appraisal rights for Chinese companies coming home in Homecoming For Chinese Companies: Appraisal Rights &amp; Fair Value), Sina had intended to issue written notices of authorization to objecting shareholders (prior to the EGM, 21.5mn shares or 35.9% of the outstanding shares of Sina issued notices of objections to the company). The dissenting total was quite high, and could have been a reason for Charles Chao to walk away from the deal, but despite the "requirement" to issue authorization notices by early Feb, there was no public acknowledgment of the situation by SINA until 22 March when the company issued a press release saying the merger had been completed.So that was done.Back in February, the Hong Kong capital markets world was atwitter (woefully bad pun intended) with the news (Bloomberg, Reuters, that Weibo Corp (Adr) (WB US), China's largest micro-blogging service (China twitter) intended to launch a secondary offering in Hong Kong, like many other US ADR-listed Chinese companies, and had hired banks (GS, CLSA, CS) to do so. But since then, there has been no follow-up news. But There is Now NEW "News"... Which is Not Yet NewsLate in the Asia evening on 6 July 2021, Reuters had an EXCLUSIVE which said Weibo chairman Charles Chao - with 45% of shares out but 71% of voting rights - would team up with an as-yet unnamed Shanghai-based state firm to take the company private. One goal would be to get Alibaba Group (BABA US) out of their 30% stake. Two sources told Reuters the consortium plans to offer $90-100/share.As I wrote that sentence, the shares were indicated +30% at just over US$71/share. My first thought was that the shares would trade "wide" to these early-reported terms as there are political considerations (will the State Council appreciate that a regional SASAC puts up money to buy out an internet firm?), questions about where BABA would agree to sell, timeline, and questions about what Charles Chao and the unnamed Shanghai entity would do if materially all the minorities dissented.As I finish that paragraph, Bloomberg appears to have reached a Weibo Corp (Adr) (WB US) spokesperson who says that this rumour is not true. And a while later, we have a Weibo release which offers a pretty strong denial. Of course, that doesn't mean it isn't true. It just means that it isn't true for public consumption yet.But it is a big interesting situation so we take a closer look at the parameters! And the shares opened up 10%.

Weibo Corp

What's Going On With Weibo?