Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>On the 27 May, <a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Administration Holdings (LNK AU)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02379094-2A1300378?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it had received an Offer from KKR, in partnership with <a href="https://www.smartkarma.com/entities/domain-holdings-australia-ltd" target="_blank" data-smartkarma-citation="entities:26033:1" rel="noopener">Domain Holdings Australia (DHG AU)</a>, representing an EV of $3bn for 100% of PEXA, or A$1.38bn for Link's equity stake. The proposal remained "open and capable of acceptance" until 5 pm on the 30 May. </p>
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<p>Link has now responded by <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02379720-2A1300690?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announcing</a> it would take PEXA public on with an enterprise value of A$3.3bn.</p>
<p>The proposed listing on the ASX may occur before the end of the next month, subject to ASX requirements. </p>
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<p>More below the fold.</p>
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On the 27 May, Link Administration Holdings (LNK AU) announced it had received an Offer from KKR, in partnership with Domain Holdings Australia (DHG AU), representing an EV of $3bn for 100% of PEXA, or A$1.38bn for Link's equity stake. The proposal remained "open and capable of acceptance" until 5 pm on the 30 May. 


Link has now responded by announcing it would take PEXA public on with an enterprise value of A$3.3bn.
The proposed listing on the ASX may occur before the end of the next month, subject to ASX requirements. 


More below the fold.


Link Admin (LNK AU) Goes IPO Route For PEXA Afterall

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<p>Late last month, following a lull in corporate activity announcements subsequent to nonbinding Offers from both PEP/Carlyle and <a href="https://www.smartkarma.com/entities/ss-c-technologies-holdings" target="_blank" data-smartkarma-citation="entities:3464:1" rel="noopener">SS&amp;C Technologies (SSNC US)</a>, <a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Group (LNK AU)</a> said it was fielding interest for its 44.18% stake in PEXA, a digital property settlements group.</p>
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<p>Bids were speculated to top A$2.5bn-A$3bn, or at least A$1.1bn A$2.05/share) for Link's stake. This compares to A$1.60/share under PEP/Carlyle's non-binding proposal.</p>
<p>Link has now <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02379094-2A1300378?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it has received an Offer from KKR, in partnership with <a href="https://www.smartkarma.com/entities/domain-holdings-australia-ltd" target="_blank" data-smartkarma-citation="entities:26033:1" rel="noopener">Domain Holdings Australia (DHG AU)</a>, representing an EV of $3bn for 100% of PEXA, or A$1.38bn for Link's equity stake. </p>
<p>The offer is subject to a number of conditions including FIRB and Link abandoning PEXA's IPO.</p>
<p>The proposal remains "<em>open and capable of acceptance</em>" until 5 pm on the 30 May. </p>
<p>More below the fold.</p>


Late last month, following a lull in corporate activity announcements subsequent to nonbinding Offers from both PEP/Carlyle and SS&amp;C Technologies (SSNC US), Link Group (LNK AU) said it was fielding interest for its 44.18% stake in PEXA, a digital property settlements group.

Bids were speculated to top A$2.5bn-A$3bn, or at least A$1.1bn A$2.05/share) for Link's stake. This compares to A$1.60/share under PEP/Carlyle's non-binding proposal.
Link has now announced it has received an Offer from KKR, in partnership with Domain Holdings Australia (DHG AU), representing an EV of $3bn for 100% of PEXA, or A$1.38bn for Link's equity stake. 
The offer is subject to a number of conditions including FIRB and Link abandoning PEXA's IPO.
The proposal remains "open and capable of acceptance" until 5 pm on the 30 May. 
More below the fold.

Link Group (LNK AU): KKR Opens The Bidding For PEXA

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p><strong><em>*Glittering Quarter: </em></strong>Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] reported 1Q21 earnings of HKD 3.8 bn, improving HKD 915 mn (31.3%) linked quarter. Results were even more impressive when we exclude investment income (declined HKD 363 mn or 43.8% linked quarter) – increasing HKD 1.3 bn (61.0%) to HKD 3.4 bn. Results were highlighted by HKEX’ positive operating jaws, as recurring revenue increased HKD 1.2 bn (28.6%) while operating expenses declined HKD 194 mn (14.5%) over the period;  and</p><p><strong><em>*Risks Are Increasing: </em></strong>In addition to an extended valuation when ADT has begun to turn and having a new CEO with no exchange experiences, HKEX needs to contend with the government’s examination of a stamp duty increase and mainland China’s contemplation of a new stock exchange to attract overseas-listed firms (including Hong Kong) which will bolster Shanghai’s status as a global financial center.</p>

*Glittering Quarter: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] reported 1Q21 earnings of HKD 3.8 bn, improving HKD 915 mn (31.3%) linked quarter. Results were even more impressive when we exclude investment income (declined HKD 363 mn or 43.8% linked quarter) – increasing HKD 1.3 bn (61.0%) to HKD 3.4 bn. Results were highlighted by HKEX’ positive operating jaws, as recurring revenue increased HKD 1.2 bn (28.6%) while operating expenses declined HKD 194 mn (14.5%) over the period;  and*Risks Are Increasing: In addition to an extended valuation when ADT has begun to turn and having a new CEO with no exchange experiences, HKEX needs to contend with the government’s examination of a stamp duty increase and mainland China’s contemplation of a new stock exchange to attract overseas-listed firms (including Hong Kong) which will bolster Shanghai’s status as a global financial center.

Hong Kong Exchanges & Clearing – Golden Quarter, But Risks Are High

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<p>Back on the 12 October,  <a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Administration Holdings (LNK AU)</a>  <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02292481-2A1255763?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> a conditional, non-binding indicative proposal from a consortium comprising Pacific Equity Partners (PEP) and the Carlyle Group, by way of a Scheme. The indicative cash price was A$5.20/share, a 30% premium to last close. Perpetual, holding 9.65% of shares out, said it would vote for a firm Offer of $5.20/share and above.</p>
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<div>After Link <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02297758-2A1258281?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">said</a> the proposal "<em>materially undervalued the company</em>", PEP/Carlyle <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02298663-2A1258716?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">tabled</a> a A$5.40/share non-binding indicative Offer, in cash. The proposal included an option of a cash offer for Link ex-Property Exchange Australia (PEXA) of A$3.80/share. Shareholders with <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02298654-2A1258715?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">14.62%</a> of shares out stated their intention to vote in favour of PEP/Carlyle's latest proposal. Link <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02300645-2A1259592?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">responded</a> that the proposal was not compelling - but gave the consortium due diligence access nonetheless.</div>
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<div>Shortly after, software provider <a href="https://www.smartkarma.com/entities/ss-c-technologies-holdings" target="_blank" data-smartkarma-citation="entities:3464:1" rel="noopener">Ss&amp;C Technologies (SSNC US)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02298663-2A1258716?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">pitched</a> a non-binding indicative proposal, by way of Scheme, at A$5.65/share, 4.6% above PEP/Carlyle's proposal. Link <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02320482-2A1269370?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">granted</a> SSNC due diligence, despite the Offer "not being compelling". But on the 3 January, SS&amp;C <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02327774-2A1273133?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">withdrew</a> its proposal.</div>
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<div>Then crickets. In its 1H21 results (25 Feb), Link simply <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02346108-2A1282955?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">said</a>: "<em>PEP/Carlyle engagement remains active.</em>"</div>
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<h3>The NEW News</h3>
<div>After months of Link saying to investors it has received various interest in its PEXA stake, indicative bids are now coming in for Link's 44% stake in the digital property settlements group.</div>
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<div>Bids are expected to top A$1bn+ for Link's stake, or $1.86/share - vs. A$1.60/share under PEP/Carlyle's non-binding proposal.</div>
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<p>More below the fold.</p>
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Back on the 12 October,  Link Administration Holdings (LNK AU)  announced a conditional, non-binding indicative proposal from a consortium comprising Pacific Equity Partners (PEP) and the Carlyle Group, by way of a Scheme. The indicative cash price was A$5.20/share, a 30% premium to last close. Perpetual, holding 9.65% of shares out, said it would vote for a firm Offer of $5.20/share and above.


After Link said the proposal "materially undervalued the company", PEP/Carlyle tabled a A$5.40/share non-binding indicative Offer, in cash. The proposal included an option of a cash offer for Link ex-Property Exchange Australia (PEXA) of A$3.80/share. Shareholders with 14.62% of shares out stated their intention to vote in favour of PEP/Carlyle's latest proposal. Link responded that the proposal was not compelling - but gave the consortium due diligence access nonetheless.


Shortly after, software provider Ss&amp;C Technologies (SSNC US) pitched a non-binding indicative proposal, by way of Scheme, at A$5.65/share, 4.6% above PEP/Carlyle's proposal. Link granted SSNC due diligence, despite the Offer "not being compelling". But on the 3 January, SS&amp;C withdrew its proposal.

Then crickets. In its 1H21 results (25 Feb), Link simply said: "PEP/Carlyle engagement remains active."



  
The NEW News
After months of Link saying to investors it has received various interest in its PEXA stake, indicative bids are now coming in for Link's 44% stake in the digital property settlements group.


Bids are expected to top A$1bn+ for Link's stake, or $1.86/share - vs. A$1.60/share under PEP/Carlyle's non-binding proposal.




More below the fold.


<p><strong><em>*Trying SPACs On For Size: </em></strong>On March 31, 2021, the Singapore Exchange (SGX.SP) [SGX] issued a Consultation Paper on the Proposed Listing Framework for Special Purpose Acquisition Companies<em> </em>(SPACs). The Consultation Paper is seeking comments on policy/rule proposals to allow SPAC listings on SGX;  </p><p><em><strong>*Blank Check Companies:</strong></em> Special Purpose Acquisition Companies (SPACs) are not new and have historically focused on the Over the Counter (OTC) pink sheet companies. SPACs are essentially known as blank check companies, essentially a shell company which raises a significant amount cash in an IPO; and</p><p><strong><em>*Not A Panacea: </em></strong>SPACs are not the panacea which will resolve SGX’s weakened revenue stream. Keep in mind that the majority of the US-listed SPACs remain below their USD 10 per share offering price and only seven have actually returned capital to investors. As the world heads toward a zero interest rate environment coupled with the giant vortex of skittish liquidity backstopped by central banks, the SPAC frenzy looks to be just the latest in a long line of unintended consequences of risk taking.</p>

*Trying SPACs On For Size: On March 31, 2021, the Singapore Exchange (SGX.SP) [SGX] issued a Consultation Paper on the Proposed Listing Framework for Special Purpose Acquisition Companies (SPACs). The Consultation Paper is seeking comments on policy/rule proposals to allow SPAC listings on SGX;  *Blank Check Companies: Special Purpose Acquisition Companies (SPACs) are not new and have historically focused on the Over the Counter (OTC) pink sheet companies. SPACs are essentially known as blank check companies, essentially a shell company which raises a significant amount cash in an IPO; and*Not A Panacea: SPACs are not the panacea which will resolve SGX’s weakened revenue stream. Keep in mind that the majority of the US-listed SPACs remain below their USD 10 per share offering price and only seven have actually returned capital to investors. As the world heads toward a zero interest rate environment coupled with the giant vortex of skittish liquidity backstopped by central banks, the SPAC frenzy looks to be just the latest in a long line of unintended consequences of risk taking.

Singapore Exchange – Into Merlion’s Mouth

Australia

Computershare Limited operates share registries and computer bureaus which includes the administration of employee share and option plans and the provision of software that specializes in share registry, financial and stock markets. The Company also provides corporate trust services and acts as a trustee for clients' debt offerings in certain markets.

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Computershare Ltd (CPU AU)

Link Admin (LNK AU) Goes IPO Route For PEXA Afterall

I would sell here. Link will be transformed into a holdco, and a discount thereon. Even assigning a stock standard 25% holdco discount to NAV, Link...

David Blennerhassett

Link Group (LNK AU): KKR Opens The Bidding For PEXA

Shares should pop tomorrow. There remain other interested parties in PEXA. Plus you still have PEP/Carlyle's non-binding Offer behind the scenes. I...

David Blennerhassett

Hong Kong Exchanges & Clearing – Golden Quarter, But Risks Are High

HONG KONG EXCHANGES & CLEARING: HKEX 1Q21 operating earnings increased 61.0% QOQ, highlighted by positive operating jaws. HKEX needs to contend a...

Thomas J. Monaco

Link Admin (LNK AU): PEXA Bidding

You have multiple competing players for PEXA, the outcome could potentially surprise to the the upside. Plus you still have PEP/Carlyle's non...

David Blennerhassett

Singapore Exchange – Into Merlion’s Mouth

SINGAPORE EXCHANGE: SGX issued a Consultation Paper on SPACs seeking comments on policy proposals to allow SPAC IPOs. SPACs are not the panacea...

Thomas J. Monaco

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