Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Founded in 2003 by the CEO Anthony Casalena, Squarespace is getting ready to complete its direct public listing on May 19 on the New York Stock Exchange. Squarespace raised $300 million ($68.42 per share) in March 2021 from investors including Tiger Global, D1 Capital Partners, and Fidelity Management &amp; Research Company, valuing the company at nearly<a href="https://www.reuters.com/article/us-squarespace-funding-idUSKBN2B832O" target="_blank" rel="noopener"> $10 billion. </a>Other major investors of the company include Accel, Index Ventures, and General Atlantic. Squarespace joins a list of numerous technology companies that have become public through the direct listing route, including <a href="https://www.smartkarma.com/entities/palantir-technologies-inc" target="_blank" data-smartkarma-citation="entities:27728:1" rel="noopener">Palantir Technologies Inc (PLTR US)</a>, <a href="https://www.smartkarma.com/entities/roblox-corp" target="_blank" data-smartkarma-citation="entities:29697:1" rel="noopener">ROBLOX Corp (RBLX US)</a>, and <a href="https://www.smartkarma.com/entities/coinbase-global-inc" target="_blank" data-smartkarma-citation="entities:32227:1" rel="noopener">Coinbase (COIN US)</a>. Squarespace's shareholders have registered to sell about 40.4 million common shares with the CEO Anthony Caslena holding a 68.2% stake. Squarespace is a one-stop-shop platform for websites creation, domains, e-commerce, and marketing tools for companies and organizations to manage their social media presence. The company generated sales of $621.2 million in 2020, up 28.1% YoY. Its sales growth accelerated by 31.3% YoY to $179.7 million in 1Q 2021. Although the company benefited from higher sales and gross margins, its operating margins declined from 12.7% in 2019 to 6.5% in 2020, which was caused by higher R&amp;D and sales &amp; marketing expenses.

Founded in 2003 by the CEO Anthony Casalena, Squarespace is getting ready to complete its direct public listing on May 19 on the New York Stock Exchange. Squarespace raised $300 million ($68.42 per share) in March 2021 from investors including Tiger Global, D1 Capital Partners, and Fidelity Management &amp; Research Company, valuing the company at nearly $10 billion. Other major investors of the company include Accel, Index Ventures, and General Atlantic. Squarespace joins a list of numerous technology companies that have become public through the direct listing route, including Palantir Technologies Inc (PLTR US), ROBLOX Corp (RBLX US), and Coinbase (COIN US). Squarespace's shareholders have registered to sell about 40.4 million common shares with the CEO Anthony Caslena holding a 68.2% stake. Squarespace is a one-stop-shop platform for websites creation, domains, e-commerce, and marketing tools for companies and organizations to manage their social media presence. The company generated sales of $621.2 million in 2020, up 28.1% YoY. Its sales growth accelerated by 31.3% YoY to $179.7 million in 1Q 2021. Although the company benefited from higher sales and gross margins, its operating margins declined from 12.7% in 2019 to 6.5% in 2020, which was caused by higher R&amp;D and sales &amp; marketing expenses.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<div>
On the 28 February, e-commerce and payment solutions provider <a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/gem/2021/0228/2021022800069.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard. Shareholders are offered HK$0.1352/share in cash plus an in-specie distribution of 0.05077265 Youzan Technology shares for every China Youzan share held.
All in, the indicative Offer price was HK$2.3088/share, a 30.2% discount to last close. China Youzan was up 283% in the past year, and 44% YTD prior to the offer. 
In <a href="https://skr.ma/qgiJ9" target="_blank" rel="noopener">China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech</a>, I recommended avoiding the stock, with a view to re-entering if it closed in on the implied fair value using peer multiples, or ~HK$2.20/share. 
On the 6  May, Disinterested Scheme Shareholders <a href="https://www1.hkexnews.hk/listedco/listconews/gem/2021/0506/2021050602278.pdf" target="_blank" rel="noopener">approved</a> at the First SGM a rollover arrangement and other side-agreements - not the take-private proposal as has been incorrectly reported by some media sources. The Scheme Document is expected to be posted on or before the 15 June. 
Shares closed today at $2.09/share, down 5.4%, and down 37% since the delisting proposal. 
This is starting to look more attractive.
</div>


On the 28 February, e-commerce and payment solutions provider China Youzan Limited (8083 HK) announced a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard. Shareholders are offered HK$0.1352/share in cash plus an in-specie distribution of 0.05077265 Youzan Technology shares for every China Youzan share held.
All in, the indicative Offer price was HK$2.3088/share, a 30.2% discount to last close. China Youzan was up 283% in the past year, and 44% YTD prior to the offer. 
In China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech, I recommended avoiding the stock, with a view to re-entering if it closed in on the implied fair value using peer multiples, or ~HK$2.20/share. 
On the 6  May, Disinterested Scheme Shareholders approved at the First SGM a rollover arrangement and other side-agreements - not the take-private proposal as has been incorrectly reported by some media sources. The Scheme Document is expected to be posted on or before the 15 June. 
Shares closed today at $2.09/share, down 5.4%, and down 37% since the delisting proposal. 
This is starting to look more attractive.


China Youzan (8083 HK): Reality Check As Shares Rollover

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

Youzan Technology (YT) is looking to list by way of introduction, as its parent <a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a> aims to distribute its shares in YT and pay some cash on top and delist.
While we normally don't cover such listings, as there will be no bookbuild etc, in this insight, we take a quick look based on a special client's request.

Youzan Technology (YT) is looking to list by way of introduction, as its parent China Youzan Limited (8083 HK) aims to distribute its shares in YT and pay some cash on top and delist.
While we normally don't cover such listings, as there will be no bookbuild etc, in this insight, we take a quick look based on a special client's request.

Youzan Technology IPO Quick Look- Great Headline Numbers but Client Growth Is Slow and Churn Is High

<a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a>, a provider of e-commerce and payment solutions for merchants, has <a href="https://www1.hkexnews.hk/listedco/listconews/gem/2021/0228/2021022800069.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard.
Shareholders are offered HK$0.1352/share in cash plus 0.05077265 Youzan Technology shares for every China Youzan share held. All in, the indicative Offer price is HK$2.3088/share, a 30.2% discount to last close. China Youzan is up 283% in the past year, and 44% YTD prior to the offer. 
The Offeror - China Youzan's CEO Zhu Ning -  will not increase the Scheme Consideration and does not reserve the right to do so.
Pre-conditions include SEHK approving Youzan Tech's listing; together with a handful of ordinary resolutions to be voted on by Disinterested Scheme shareholders at an SGM, none of which are expected to be cause for concern.
The Scheme vote is standard: at least 75% of Disinterested Scheme Shares voting FOR the Scheme &amp; not more than 10% of ALL Disinterested Scheme Shares against. China Youzan is incorporated in the Caymans so the headcount test applies. No single shareholder holds a blocking stake.
The in-specie ratio distribution of Youzan Tech is equivalent to the control ratio. The pushback, if any, may come from the fair value assigned to China Youzan's rump. 
More below the fold.

China Youzan Limited (8083 HK), a provider of e-commerce and payment solutions for merchants, has announced a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard.
Shareholders are offered HK$0.1352/share in cash plus 0.05077265 Youzan Technology shares for every China Youzan share held. All in, the indicative Offer price is HK$2.3088/share, a 30.2% discount to last close. China Youzan is up 283% in the past year, and 44% YTD prior to the offer. 
The Offeror - China Youzan's CEO Zhu Ning -  will not increase the Scheme Consideration and does not reserve the right to do so.
Pre-conditions include SEHK approving Youzan Tech's listing; together with a handful of ordinary resolutions to be voted on by Disinterested Scheme shareholders at an SGM, none of which are expected to be cause for concern.
The Scheme vote is standard: at least 75% of Disinterested Scheme Shares voting FOR the Scheme &amp; not more than 10% of ALL Disinterested Scheme Shares against. China Youzan is incorporated in the Caymans so the headcount test applies. No single shareholder holds a blocking stake.
The in-specie ratio distribution of Youzan Tech is equivalent to the control ratio. The pushback, if any, may come from the fair value assigned to China Youzan's rump. 
More below the fold.

China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

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.

On 28 February, <a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a> disclosed a privatisation offer from Mr Zhu Ning, the CEO. Mr Ning is taking private China Youzan through the distribution in-specie of Youzan Technology and a cash buyout of the payment business. China Youzan will distribute in-specie its equity holdings in Youzan Technology by offering 0.05077265 Youzan Technology share for every China Youzan share along with HK$0.1352 in cash per scheme share. Youzan Technology will be listed on the Main Board of the HKEx. The total privatisation price of HK$2.3088 per share is 30.2% and 28.3% discount to the last trading date price of HK$3.31 (25 February 2021) and the last close price of HK$3.23, respectively. The key pre-conditions are HKEx listing approval for Youzan Technology and shareholder approval at the first SGM. The key conditions precedents are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). The offeror and concert parties represent 4,020.8 million shares or 23.31% of shares outstanding. Disinterested scheme shareholders represent 13,239.3 million shares or 76.69% of shares outstanding, which implies the 10% blocking stake is 1,323.9 million shares or 7.67% of shares outstanding.<div class="content-highlight">The privatisation offer is fair in both the distribution in-specie (distribution ratio in line with the control ratio) and the cash consideration (in line with the value of the payments business). The discrepancy between the privatisation bid and the current share price can be explained by Youzan Technology's potential standalone value as a listed entity. If Youzan Technology is valued at <a href="https://www.smartkarma.com/entities/shopify-inc-de74469e-4678-489b-9b50-a80a5790c5ef" target="_blank" data-smartkarma-citation="entities:25906:1" rel="noopener">Shopify Inc (SHOP US)</a>’s current trailing EV/Sales multiple of 53.5x (arguably the closest peer), it would imply a fair value of China Youzan of HK$3.54 per share. Overall, we believe that the privatisation bid will succeed due to the reasonable terms.  </div>

On 28 February, China Youzan Limited (8083 HK) disclosed a privatisation offer from Mr Zhu Ning, the CEO. Mr Ning is taking private China Youzan through the distribution in-specie of Youzan Technology and a cash buyout of the payment business. China Youzan will distribute in-specie its equity holdings in Youzan Technology by offering 0.05077265 Youzan Technology share for every China Youzan share along with HK$0.1352 in cash per scheme share. Youzan Technology will be listed on the Main Board of the HKEx. The total privatisation price of HK$2.3088 per share is 30.2% and 28.3% discount to the last trading date price of HK$3.31 (25 February 2021) and the last close price of HK$3.23, respectively. The key pre-conditions are HKEx listing approval for Youzan Technology and shareholder approval at the first SGM. The key conditions precedents are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). The offeror and concert parties represent 4,020.8 million shares or 23.31% of shares outstanding. Disinterested scheme shareholders represent 13,239.3 million shares or 76.69% of shares outstanding, which implies the 10% blocking stake is 1,323.9 million shares or 7.67% of shares outstanding.The privatisation offer is fair in both the distribution in-specie (distribution ratio in line with the control ratio) and the cash consideration (in line with the value of the payments business). The discrepancy between the privatisation bid and the current share price can be explained by Youzan Technology's potential standalone value as a listed entity. If Youzan Technology is valued at Shopify Inc (SHOP US)’s current trailing EV/Sales multiple of 53.5x (arguably the closest peer), it would imply a fair value of China Youzan of HK$3.54 per share. Overall, we believe that the privatisation bid will succeed due to the reasonable terms.  

United States

BigCommerce Holdings, Inc. operates as a software company. The Company offers SaaS platform for cross-channel commerce and cloud-based e-commerce solution that scales with business growth. BigCommerce Holdings serves customers worldwide.

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BigCommerce Holdings (BIGC US)

Squarespace Direct Listing Preview

Squarespace is getting ready to complete its direct public listing on May 19 on the New York Stock Exchange. In this insight, we provide the key...

Douglas Kim

China Youzan (8083 HK): Reality Check As Shares Rollover

Buying China Youzan means you are buying the Youzan Tech IPO at an Implied EV/sales multiple. That's around a 10% premium to peers currently. The...

David Blennerhassett

Youzan Technology IPO Quick Look- Great Headline Numbers but Client Growth Is Slow and Churn Is High

Youzan Technology (YT) is looking to list by way of introduction, as its parent China Youzan Limited (8083 HK) aims to distribute its shares in YT...

Sumeet Singh

China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech

I would avoid the stock. Valuations exceed what the independent valuer considers is fair. I'd look to re-enter if this closes in on the implied...

David Blennerhassett

China Youzan’s Privatisation Proposal

China Youzan disclosed a privatisation offer through the distribution in-specie of Youzan Technology and a cash buyout of the payment business. The...

Arun George

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