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.

Event-Driven

Washington H. Soul Pattinson and Co. Ltd / Event-Driven

Washington H. Soul Pattinson and Co. Ltd (SOL AU)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/brickworks-ltd" target="_blank" data-smartkarma-citation="entities:2726:1" rel="noopener">Brickworks Ltd (BKW AU)</a> entered a combination deed with <a href="https://www.smartkarma.com/entities/washington-h-soul-pattinson-and-co-ltd" target="_blank" data-smartkarma-citation="entities:6054:1" rel="noopener">Washington H. Soul Pattinson and Co. Ltd (SOL AU)</a>. A newly-capitalised ASX-listed company (TopCo) will merge Brickworks and Soul Patts. </li>
<li>The scheme vote is low risk as both Brickworks and Soul Patts shareholders will support the merger, which provides an elegant solution to unwind the cross-shareholdings. </li>
<li>Investor support for the transaction seems strong, as evidenced by the A$550 million commitments for TopCo at a stingy NIL discount to the SOL last close price.</li>
</ul>



Brickworks Ltd (BKW AU) entered a combination deed with Washington H. Soul Pattinson and Co. Ltd (SOL AU). A newly-capitalised ASX-listed company (TopCo) will merge Brickworks and Soul Patts. 
The scheme vote is low risk as both Brickworks and Soul Patts shareholders will support the merger, which provides an elegant solution to unwind the cross-shareholdings. 
Investor support for the transaction seems strong, as evidenced by the A$550 million commitments for TopCo at a stingy NIL discount to the SOL last close price.


Brickworks (BKW AU)/Soul Patts (SOL AU): An Attractive Merger to Unwind the Cross-Shareholding

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The cross-shareholding between <a href="https://www.smartkarma.com/entities/washington-h-soul-pattinson-and-co-ltd" target="_blank" data-smartkarma-citation="entities:6054:1" rel="noopener">Washington H. Soul Pattinson (SOL AU)</a> (Soul Patts) and <a href="https://www.smartkarma.com/entities/brickworks-ltd" target="_blank" data-smartkarma-citation="entities:2726:1" rel="noopener">Brickworks Ltd (BKW AU)</a> was established in 1969 to defend the companies from corporate raiders.</li>
<li>Perpetual pursued a case in the Federal Court of Australia, alleging that the cross-shareholding was oppressive to minority shareholders; however the claim was dismissed in 2017.</li>
<li>Today, via inter-conditional Schemes, the circularity is set to be unwound through a merger. Soul Patts currently owns 43.3% in Brickworks, and Brickworks 26% in Soul Patts. </li>
</ul>


The cross-shareholding between Washington H. Soul Pattinson (SOL AU) (Soul Patts) and Brickworks Ltd (BKW AU) was established in 1969 to defend the companies from corporate raiders.
Perpetual pursued a case in the Federal Court of Australia, alleging that the cross-shareholding was oppressive to minority shareholders; however the claim was dismissed in 2017.
Today, via inter-conditional Schemes, the circularity is set to be unwound through a merger. Soul Patts currently owns 43.3% in Brickworks, and Brickworks 26% in Soul Patts. 


Soul Patts/Brickworks To Unwind Circularity

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>
<a href="https://www.smartkarma.com/entities/washington-h-soul-pattinson-and-co-ltd" target="_blank" data-smartkarma-citation="entities:6054:1" rel="noopener">Washington H. Soul Pattinson (SOL AU)</a> and <a href="https://www.smartkarma.com/entities/brickworks-ltd" target="_blank" data-smartkarma-citation="entities:2726:1" rel="noopener">Brickworks Ltd (BKW AU)</a> have executed a binding Combination Deed to implement an A$14bn merger that simplifies the company structure by eliminating crossholdings.</li>
<li>The merger ratio is a good one for <a href="https://www.smartkarma.com/entities/brickworks-ltd" target="_blank" data-smartkarma-citation="entities:2726:1" rel="noopener">Brickworks Ltd (BKW AU)</a> shareholders and the benefits to both sets of shareholders should see the merger approved.</li>
<li>There will be large passive buying in <a href="https://www.smartkarma.com/entities/washington-h-soul-pattinson-and-co-ltd" target="_blank" data-smartkarma-citation="entities:6054:1" rel="noopener">Washington H. Soul Pattinson (SOL AU)</a> from global and local index trackers and that could lead to short covering.</li>
</ul>



Washington H. Soul Pattinson (SOL AU) and Brickworks Ltd (BKW AU) have executed a binding Combination Deed to implement an A$14bn merger that simplifies the company structure by eliminating crossholdings.
The merger ratio is a good one for Brickworks Ltd (BKW AU) shareholders and the benefits to both sets of shareholders should see the merger approved.
There will be large passive buying in Washington H. Soul Pattinson (SOL AU) from global and local index trackers and that could lead to short covering.


Soul Patts & Brickworks: Index Impact of A$14bn Merger

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of ASX Stocks as of Apr 5th (reported today) which has an aggregated short interest worth USD19.1bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in BHP, Treasury Wine, Northern Star Re, Flight Centre, Macquarie, Woodside Energy, Netwealth.</li>
</ul>


We analyzed the changes in short interest of ASX Stocks as of Apr 5th (reported today) which has an aggregated short interest worth USD19.1bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in BHP, Treasury Wine, Northern Star Re, Flight Centre, Macquarie, Woodside Energy, Netwealth.


ASX Short Interest Weekly (Apr 5th): BHP, Treasury Wine, Northern Star Re, Flight Centre, Macquarie

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dai-ichi-life-insurance" target="_blank" data-smartkarma-citation="entities:1109:1" rel="noopener">Dai Ichi Life (8750 JP)</a>'s proposal suggests more upside to <a href="https://www.smartkarma.com/entities/benefit-one-inc" target="_blank" data-smartkarma-citation="entities:14502:1" rel="noopener">Benefit One (2412 JP)</a>'s minorities than originally thought, and less upside (but still a chunk) to <a href="https://www.smartkarma.com/entities/pasona-group-inc" target="_blank" data-smartkarma-citation="entities:15778:1" rel="noopener">Pasona Group (2168 JP)</a>.</li>
<li>It's all over for <a href="https://www.smartkarma.com/entities/eoflow-co-ltd" target="_blank" data-smartkarma-citation="entities:36100:1" rel="noopener">EOFlow (294090 KS)</a>, as <a href="https://www.smartkarma.com/entities/medtronic-plc" target="_blank" data-smartkarma-citation="entities:14982:1" rel="noopener">Medtronic Plc (MDT US)</a> folds it tent. </li>
<li>Cho Hyun-Sik (eldest son of Cho Yang-Rae, Chairman of <a href="https://www.smartkarma.com/entities/hankook-company-co-ltd" target="_blank" data-smartkarma-citation="entities:19369:1" rel="noopener">Hankook &amp; Company (000240 KS)</a> has joined MBK Partners in making a partial Tender Offer for Hankook &amp; Co.</li>
</ul>



Dai Ichi Life (8750 JP)'s proposal suggests more upside to Benefit One (2412 JP)'s minorities than originally thought, and less upside (but still a chunk) to Pasona Group (2168 JP).
It's all over for EOFlow (294090 KS), as Medtronic Plc (MDT US) folds it tent. 
Cho Hyun-Sik (eldest son of Cho Yang-Rae, Chairman of Hankook &amp; Company (000240 KS) has joined MBK Partners in making a partial Tender Offer for Hankook &amp; Co.


Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

Australia

Brickworks Limited manufactures and distributes clay products including brick, paver and floor tile products.  The Company also has investment interests in unlisted and listed companies along with property development activities.

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Brickworks Ltd (BKW AU)

Brickworks (BKW AU)/Soul Patts (SOL AU): An Attractive Merger to Unwind the Cross-Shareholding

The scheme vote is low risk as both Brickworks and Soul Patts shareholders will support the merger, which provides an elegant solution to unwind...

Arun George

Soul Patts/Brickworks To Unwind Circularity

The obvious trade is to short SOL, buy BKW. I see the current spread at 3.1%. BKW is not super lilquid. No urgency to chase the spread.

David Blennerhassett

Soul Patts & Brickworks: Index Impact of A$14bn Merger

SOL and BKW have announced an A$14bn merger. There is large short interest in both stocks. There will be significant passive buying in SOL...

Brian Freitas

ASX Short Interest Weekly (Apr 5th): BHP, Treasury Wine, Northern Star Re, Flight Centre, Macquarie

We analyzed ASX short interest report for the past week and highlight short interest changes in BHP, Treasury Wine, Northern Star Re, Flight...

Ke Yan, CFA, FRM

Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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