Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Bain Capital-backed <a href="https://www.smartkarma.com/entities/chindata-group-holdings-adr" target="_blank" data-smartkarma-citation="entities:29274:1" rel="noopener">Chindata Group (CD US)</a> is on the move after Bloomberg flagged - again - interest from industry players.</li>
<li>This time, SOE-backed China Merchants Group is understood to be mulling a takeover of Chindata. Shares are up 23% since that article earlier this month.</li>
<li>Back in April, Bloomberg mentioned <a href="https://www.smartkarma.com/entities/gds-holdings-adr" target="_blank" data-smartkarma-citation="entities:23649:1" rel="noopener">GDS Holdings (ADR) (GDS US)</a>, PE outfit PAG, and <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT AB (EQT SS)</a>-backed EdgeConneX were rumoured to be interested in merging with Chindata. </li>
</ul>


Bain Capital-backed Chindata Group (CD US) is on the move after Bloomberg flagged - again - interest from industry players.
This time, SOE-backed China Merchants Group is understood to be mulling a takeover of Chindata. Shares are up 23% since that article earlier this month.
Back in April, Bloomberg mentioned GDS Holdings (ADR) (GDS US), PE outfit PAG, and EQT AB (EQT SS)-backed EdgeConneX were rumoured to be interested in merging with Chindata. 


Chindata: China Merchants Potentially In The Mix

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<ul>
<li>FirstGroup's Board rejected a 118p + up to 45.6p contingent payment. PUSU deadline is 23 June, and can be extended with the consent of the Panel. </li>
<li>Infrastructure funds have put their sight on UK buses due to predictable revenues and a friendlier regulatory framework. The Board of FirstGroup is aware and should seek higher value.</li>
<li>I Square could bid a more palatable 166.8p/share: 144p/share (8.2x EV/Fwd EBIT, average of StageCoach and Go-Ahead transactions), plus 22.8p/share (50% discount to the maximum contingent payout). Long.</li>
</ul>


FirstGroup's Board rejected a 118p + up to 45.6p contingent payment. PUSU deadline is 23 June, and can be extended with the consent of the Panel. 
Infrastructure funds have put their sight on UK buses due to predictable revenues and a friendlier regulatory framework. The Board of FirstGroup is aware and should seek higher value.
I Square could bid a more palatable 166.8p/share: 144p/share (8.2x EV/Fwd EBIT, average of StageCoach and Go-Ahead transactions), plus 22.8p/share (50% discount to the maximum contingent payout). Long.


I Squared/FirstGroup: Looming PUSU Deadline

<ul>
<li>According to Bloomberg, Bain Capital-backed <a href="https://www.smartkarma.com/entities/chindata-group-holdings-adr" target="_blank" data-smartkarma-citation="entities:29274:1" rel="noopener">Chindata Group (CD US)</a> is being scoped out by industry players.</li>
<li>
<a href="https://www.smartkarma.com/entities/gds-holdings-adr" target="_blank" data-smartkarma-citation="entities:23649:1" rel="noopener">GDS Holdings (ADR) (GDS US)</a> is rumoured to be interested in merging with Chindata. PE outfit PAG and <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT AB (EQT SS)</a>-backed EdgeConneX are also, reportedly, in the mix.</li>
<li>Chindata's shares popped but are still 64% below its IPO price. This rumour follows data center provider <a href="https://www.smartkarma.com/entities/21-vianet-group-inc-adr" target="_blank" data-smartkarma-citation="entities:8489:1" rel="noopener">21Vianet (VNET US)</a>'s recent proposal from Hina Group and Shanghai's Industrial Bank. </li>
</ul>


According to Bloomberg, Bain Capital-backed Chindata Group (CD US) is being scoped out by industry players.

GDS Holdings (ADR) (GDS US) is rumoured to be interested in merging with Chindata. PE outfit PAG and EQT AB (EQT SS)-backed EdgeConneX are also, reportedly, in the mix.
Chindata's shares popped but are still 64% below its IPO price. This rumour follows data center provider 21Vianet (VNET US)'s recent proposal from Hina Group and Shanghai's Industrial Bank. 


Cloud Chronicles: Chindata Attracting Bytes

<a href="https://www.smartkarma.com/entities/zooplus-ag" target="_blank" data-smartkarma-citation="entities:21749:1" rel="noopener">zooplus AG (ZO1 GR)</a> welcomed the €3.4 bn bid by <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT AB (EQT SS)</a> that trumps an improved offer by Hellman &amp; Friedman. Consideration is €470/share, in cash, an implied equity value of c. €3,360 mn (€3,600 mn as reported) and implied EV of €3,286.5 mn. The counteroffer represents 1.45x EV/Fwd Revenue, 39x EV/Fwd EBITDA and 116.3x Fwd P/E. It is a 69% premium to the unaffected share price as of 12 August, the day before H&amp;F announced its voluntary public takeover offer.
Hellman &amp; Friedman had previously hiked its offer from €390 to €460 per share (18% increase) after Zooplus confirmed Bloomberg reports that it was in talks with KKR and EQT about counteroffers.
The ongoing bidding war for zooplus AG shows that full valuations are not an obstacle for some private equity funds as they have record amounts of dry powder from investors (pension funds, insurance companies and HNW individuals).
Comparables are trading at a mean 1.35x EV/Fwd Revenue. This would imply a (generous) fair value for zooplus AG of €438.7/share. The shares are trading c. 11% above that value and offer 1.6% 22e FCF yield. Pet population is rising in Europe though and zooplus AG could keep on adding market share. The bottom line of zooplus is positive, unlike many retail e-commerce peers.
KKR withdrew after Hellman &amp; Friedman increased the prior offer price by 18%. The small increase of EQT's counteroffer should signal that the end of the "auction" is nigh, although I do not rule out further small increases. Gross spread to EQT's offer is -3.3%. We may be already witnessing a case of winner's curse, but of course this does not rule out a further bid by Hellman &amp; Friedman. Hats off to the Board of zooplus AG.

zooplus AG (ZO1 GR) welcomed the €3.4 bn bid by EQT AB (EQT SS) that trumps an improved offer by Hellman &amp; Friedman. Consideration is €470/share, in cash, an implied equity value of c. €3,360 mn (€3,600 mn as reported) and implied EV of €3,286.5 mn. The counteroffer represents 1.45x EV/Fwd Revenue, 39x EV/Fwd EBITDA and 116.3x Fwd P/E. It is a 69% premium to the unaffected share price as of 12 August, the day before H&amp;F announced its voluntary public takeover offer.
Hellman &amp; Friedman had previously hiked its offer from €390 to €460 per share (18% increase) after Zooplus confirmed Bloomberg reports that it was in talks with KKR and EQT about counteroffers.
The ongoing bidding war for zooplus AG shows that full valuations are not an obstacle for some private equity funds as they have record amounts of dry powder from investors (pension funds, insurance companies and HNW individuals).
Comparables are trading at a mean 1.35x EV/Fwd Revenue. This would imply a (generous) fair value for zooplus AG of €438.7/share. The shares are trading c. 11% above that value and offer 1.6% 22e FCF yield. Pet population is rising in Europe though and zooplus AG could keep on adding market share. The bottom line of zooplus is positive, unlike many retail e-commerce peers.
KKR withdrew after Hellman &amp; Friedman increased the prior offer price by 18%. The small increase of EQT's counteroffer should signal that the end of the "auction" is nigh, although I do not rule out further small increases. Gross spread to EQT's offer is -3.3%. We may be already witnessing a case of winner's curse, but of course this does not rule out a further bid by Hellman &amp; Friedman. Hats off to the Board of zooplus AG.

Solarpack Corp Tecnologica / Event-Driven

On 16 June, EQT Infrastructure, a fund managed by <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT AB (EQT SS)</a> , <a href="http://cnmv.es/portal/verDoc.axd?t=%7B18435c31-8db9-4abc-b1e4-bf7872682d88%7D" target="_blank" rel="noopener">announced a voluntary takeover bid</a> for 100% of the shares of <a href="https://www.smartkarma.com/entities/solarpack-corp-tecnologica-sa" target="_blank" data-smartkarma-citation="entities:33493:1" rel="noopener">Solarpack Corp Tecnologica (SPK SM)</a>, a developer and owner of solar photovoltaic plants, mainly active in Spain, Chile and India.
Consideration is €26.5/share, in cash, for 100% of the shares, for an implied equity value of €881.2 mn and an implied EV of €1,258.7 mn. This is 10.1x EV/Fwd Revenue and 18.7X EV/Fwd EBITDA.
EQT Infrastructure has signed irrevocable agreements for 50.957% (with €5 mn break-up fee, c. 0.6% of the transaction).
The rationale seems to be the development of the company under EQT ownership.
The offer is not particularly generous on the basis of a median TP on Capital IQ consensus of €29.4/share, but the premium offered is 45% to the prior closing. With a nearly 51% irrevocable undertakings committed, the market is discounting the success of the offer.
The shares increased by 43% and closed at €26.15, a gross spread of 1.3%, c. 4% annualised assuming the deal closes in 9 months.
Albeit the spread is not terribly exciting, I recommend long SPK SM, and would take advantage of any dip to add to the position.

On 16 June, EQT Infrastructure, a fund managed by EQT AB (EQT SS) , announced a voluntary takeover bid for 100% of the shares of Solarpack Corp Tecnologica (SPK SM), a developer and owner of solar photovoltaic plants, mainly active in Spain, Chile and India.
Consideration is €26.5/share, in cash, for 100% of the shares, for an implied equity value of €881.2 mn and an implied EV of €1,258.7 mn. This is 10.1x EV/Fwd Revenue and 18.7X EV/Fwd EBITDA.
EQT Infrastructure has signed irrevocable agreements for 50.957% (with €5 mn break-up fee, c. 0.6% of the transaction).
The rationale seems to be the development of the company under EQT ownership.
The offer is not particularly generous on the basis of a median TP on Capital IQ consensus of €29.4/share, but the premium offered is 45% to the prior closing. With a nearly 51% irrevocable undertakings committed, the market is discounting the success of the offer.
The shares increased by 43% and closed at €26.15, a gross spread of 1.3%, c. 4% annualised assuming the deal closes in 9 months.
Albeit the spread is not terribly exciting, I recommend long SPK SM, and would take advantage of any dip to add to the position.

EQT/Solarpack: Friendly Take-Private Deal

Sweden

EQT AB operates as an investment firm. The Company invests in equity, ventures, infrastructure, and real estate properties. EQT serves customers worldwide.

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EQT (EQT SS)

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David Blennerhassett

I Squared/FirstGroup: Looming PUSU Deadline

Three out of four major London-listed bus operators have attracted private equity interest in recent months. Infrastructure funds seek the stable...

Jesus Rodriguez Aguilar

Cloud Chronicles: Chindata Attracting Bytes

Although no formal sale process has occurred, Chindata is worth picking up here. Despite regulatory concerns, it is trading too cheaply to peers,...

David Blennerhassett

EQT Bites H&F in War for Zooplus AG

Small increase of EQT's counteroffer should signal that the end of the "auction" is nigh, but I do not rule out further small increases. Gross...

Jesus Rodriguez Aguilar

EQT/Solarpack: Friendly Take-Private Deal

With 51% irrevocable undertakings, the market is discounting the success of the offer. Fross spread is 1.3%, c. 4% annualised assuming the deal...

Jesus Rodriguez Aguilar

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