IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

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.

Equity Capital Markets

Kioxia Holdings  / Equity Capital Markets

Kioxia Holdings Corporation manufactures semiconductor memory products. The Company develops, produces, and sells flash memory cards, solid state drives, secure digital memory cards, and other products. Kioxia Holdings also operates group management strategy formulation and management.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kioxia-holdings-corp" target="_blank" data-smartkarma-citation="entities:29243:1" rel="noopener">Kioxia Holdings (285A JP)</a> is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$740 million.</li>
<li>In <a href="https://www.smartkarma.com/insights/kioxia-285a-jp-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:168216" rel="noopener">Kioxia (285A JP) IPO: The Bull Case</a>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on unrealistic long-term financial model assumptions, market share losses, high customer concentration risk, volatile gross margin due to JV and weak FCF profile.</li>
</ul>



Kioxia Holdings (285A JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$740 million.
In Kioxia (285A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on unrealistic long-term financial model assumptions, market share losses, high customer concentration risk, volatile gross margin due to JV and weak FCF profile.


Event-Driven

Seven & i Holdings Co., Ltd. is a holding company which was established through the merger of Ito-Yokado Co., Seven Eleven Japan Co., and Denny's Japan. The Company plans, manages, and operates mainly convenience stores, supermarkets, and department stores.

<ul>
<li>A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.</li>
<li>ECM developments: <a href="https://www.smartkarma.com/entities/kioxia-holdings-corp" target="_blank" data-smartkarma-citation="entities:29243:1" rel="noopener">Kioxia Holdings (285A JP)</a> and <a href="https://www.smartkarma.com/entities/finetoday-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:44092:1" rel="noopener">FineToday Holdings Co Ltd (289A JP)</a> IPOs, <a href="https://www.smartkarma.com/entities/hulic-co-ltd" target="_blank" data-smartkarma-citation="entities:388:1" rel="noopener">Hulic Co Ltd (3003 JP)</a> and <a href="https://www.smartkarma.com/entities/sanrio-co-ltd" target="_blank" data-smartkarma-citation="entities:16476:1" rel="noopener">Sanrio (8136 JP)</a> placements.</li>
<li>Event-Driven developments: <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>, <a href="https://www.smartkarma.com/entities/wealthnavi-inc" target="_blank" data-smartkarma-citation="entities:31058:1" rel="noopener">WealthNavi (7342 JP)</a>, <a href="https://www.smartkarma.com/entities/esr-group-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Group (1821 HK)</a>, <a href="https://www.smartkarma.com/entities/shandong-hi-speed-new-energy-g" target="_blank" data-smartkarma-citation="entities:6927:1" rel="noopener">Shandong Hi-Speed New Energy G (1250 HK)</a>, <a href="https://www.smartkarma.com/entities/vitasoy-intl-holdings-ltd" target="_blank" data-smartkarma-citation="entities:2807:1" rel="noopener">Vitasoy Intl Holdings (345 HK)</a>.       </li>
</ul>


A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: Kioxia Holdings (285A JP) and FineToday Holdings Co Ltd (289A JP) IPOs, Hulic Co Ltd (3003 JP) and Sanrio (8136 JP) placements.
Event-Driven developments: Seven &amp; I Holdings (3382 JP), WealthNavi (7342 JP), ESR Group (1821 HK), Shandong Hi-Speed New Energy G (1250 HK), Vitasoy Intl Holdings (345 HK).       


Weekly Deals Digest (01 Dec) - Seven & I, WealthNavi, ESR, SDHS New Energy, Vitasoy, Kioxia, Hulic

WealthNavi Inc. operates wealth management platform "WealthNavi". The Company provides "long-term, funded, diversified" asset management services including goal setting, portfolio building, ordering, funding, reinvestment, rebalancing, and tax optimization, risk management, financial consulting, and other services. WealthNavi provides its services throughout Japan.

<ul>
<li>In response to a Nikkei article, <a href="https://www.smartkarma.com/entities/wealthnavi-inc" target="_blank" data-smartkarma-citation="entities:31058:1" rel="noopener">WealthNavi (7342 JP)</a> disclosed <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a>’s tender offer at JPY1,950 per share, an 84.3% premium to the undisturbed price.</li>
<li>The high premium reflects WealthNavi's steep 46% YTD share price decline, i.e., the timing is opportunistic. The offer is below the Board’s requested price.</li>
<li>While the irrevocable has a competing offer clause, a competing proposal is unlikely due to MUFG’s stake. However, a bump is possible if activist(s) take around a 15% stake. </li>
</ul>


In response to a Nikkei article, WealthNavi (7342 JP) disclosed Mitsubishi UFJ Financial (MUFG) (8306 JP)’s tender offer at JPY1,950 per share, an 84.3% premium to the undisturbed price.
The high premium reflects WealthNavi's steep 46% YTD share price decline, i.e., the timing is opportunistic. The offer is below the Board’s requested price.
While the irrevocable has a competing offer clause, a competing proposal is unlikely due to MUFG’s stake. However, a bump is possible if activist(s) take around a 15% stake. 


WealthNavi (7342 JP): MUFG (8306 JP)’s Opportunistic Tender Offer

AVJennings Limited operates in the land development and housing sectors. The Company constructs residential houses in Australia along with residential land development. AVJennings serves customers in Australia.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/avjennings-ltd" target="_blank" data-smartkarma-citation="entities:12578:1" rel="noopener">Avjennings Ltd (AVJ AU)</a> disclosed a non-binding indicative proposal from AVID at A$0.67 per share, a 103.0% premium to the undisturbed price. </li>
<li>The proposal is subject to due diligence (till 31 January 2025), entry into a scheme implementation deed, and shareholder and regulatory approvals (FIRB and OIO).</li>
<li>The largest shareholder supports the offer, which represents a 20-year high. AVID has completed initial due diligence, lending confidence that a binding proposal will materialise.</li>
</ul>



Avjennings Ltd (AVJ AU) disclosed a non-binding indicative proposal from AVID at A$0.67 per share, a 103.0% premium to the undisturbed price. 
The proposal is subject to due diligence (till 31 January 2025), entry into a scheme implementation deed, and shareholder and regulatory approvals (FIRB and OIO).
The largest shareholder supports the offer, which represents a 20-year high. AVID has completed initial due diligence, lending confidence that a binding proposal will materialise.


AVJennings (AVJ AU): AVID’s Indicative Offer at A$0.67 (103% Premium)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kioxia-holdings-corp" target="_blank" rel="noopener">Kioxia Holdings (6600 JP)</a> is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$740 million.   </li>
<li>Bain Capital, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> and <a href="https://www.smartkarma.com/entities/hoya-corp" target="_blank" data-smartkarma-citation="entities:8990:1" rel="noopener">Hoya Corp (7741 JP)</a> currently own 56.23%, 40.64% and 3.13% of the voting rights, respectively. </li>
<li>The bull case rests on an attractive market opportunity, a return to revenue growth, margins close to all-time highs, a favourable cash conversion cycle, and modest leverage. </li>
</ul>



Kioxia Holdings (6600 JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$740 million.   
Bain Capital, Toshiba Corp (6502 JP) and Hoya Corp (7741 JP) currently own 56.23%, 40.64% and 3.13% of the voting rights, respectively. 
The bull case rests on an attractive market opportunity, a return to revenue growth, margins close to all-time highs, a favourable cash conversion cycle, and modest leverage. 


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.

Arun George
IPOs and Catalysts/Events
• Global Equity Research Ltd

Kioxia (285A JP) IPO: The Bear Case

The bear case rests on unrealistic long-term financial model assumptions, market share losses, high customer concentration risk, volatile gross...

Arun George

Weekly Deals Digest (01 Dec) - Seven & I, WealthNavi, ESR, SDHS New Energy, Vitasoy, Kioxia, Hulic

Last week, notable developments occurred in Event-Driven (Seven & I, WealthNavi, ESR, SDHS New Energy, Vitasoy, Capitol, AVJennings, SG Fleet) and...

Arun George

WealthNavi (7342 JP): MUFG (8306 JP)’s Opportunistic Tender Offer

The high premium reflects WealthNavi's steep 46% YTD share price decline, i.e., the timing is opportunistic. The offer is below the Board’s...

Arun George

AVJennings (AVJ AU): AVID’s Indicative Offer at A$0.67 (103% Premium)

The largest shareholder supports the offer, which represents a 20-year high. AVID has completed initial due diligence, lending confidence that a...

Arun George

Kioxia (285A JP) IPO: The Bull Case

The bull case rests on an attractive market opportunity, a return to revenue growth, margins close to all-time highs, a favourable cash conversion...

Arun George