Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>On the 15 January, <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> made a <a href="https://links.sgx.com/FileOpen/Offer%20Announcement.ashx?App=Announcement&amp;FileID=645181" target="_blank" rel="noopener">voluntary conditional cash Offer</a> for 70.84%-held <a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a>. The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.</p>
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<p>This was an underwhelming Offer from the outset, pitching GLL at a level below the COVID drop-off in Feb/March last year. In the <a href="https://links.sgx.com/FileOpen/Revised_Offeree_Circular.ashx?App=Announcement&amp;FileID=648639" target="_blank" rel="noopener">Circular</a>, the IFA agreed and said the Offer was not fair; but hedged its opinion, calling it reasonable. </p>
<p>The <a href="https://sias.org.sg/" target="_blank" data-ved="2ahUKEwjTwoy_vo7vAhXyxosBHROlAVsQFjAAegQIEhAD" rel="noopener"></a>Securities Investors Association (Singapore) (SIAS) has <a href="https://sias.org.sg/latest-updates/letter-to-guocoleisure-holdings-limited-appeal-on-behalf-of-minority-shareholders-of-gl-limited/" target="_blank" rel="noopener">joined the fray</a>, and is also less than enthusiastic with the Offer terms. But how much clout does SIAS have in Singaporean deals?</p>
<p>Shares have closed at or through terms every day since the Offer was announced.</p>
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<p>As always, more below the fold.</p>
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On the 15 January, Guoco Group Ltd (53 HK) made a voluntary conditional cash Offer for 70.84%-held GL Ltd (GLL SP). The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.


This was an underwhelming Offer from the outset, pitching GLL at a level below the COVID drop-off in Feb/March last year. In the Circular, the IFA agreed and said the Offer was not fair; but hedged its opinion, calling it reasonable. 
The Securities Investors Association (Singapore) (SIAS) has joined the fray, and is also less than enthusiastic with the Offer terms. But how much clout does SIAS have in Singaporean deals?
Shares have closed at or through terms every day since the Offer was announced.


As always, more below the fold.











SIAS Questions GL Limited's Offer: More Bark Than Bite

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.

<p><a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a> is an investment holding company with a core business in UK hotel management and operations. On Friday, GL announced a voluntary unconditional cash offer of S$0.70 per share from a wholly-owned subsidiary of <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a>. The offer price of S$0.70 per share is a 25.0% premium to the last trading price of S$0.56 per share (14 January). </p><p>The minimum acceptance condition is the offeror and concert parties hold not less than 90% of the voting rights. GuocoLeisure Assets, which represents 70.84% of outstanding shares, has provided an irrecovable to accept the offer. The minimum acceptance condition can be reduced to more than 50% or waived, subject to the consent of the Securities Industry Council.</p><div class="content-highlight"><p>The modest premium to historical long-term multiples and share prices is unlikely to excite long-term shareholders. The offer price is largely designed to appeal to shareholders looking for a respite from the uncertain prospects of the hotels business due to the COVID-19 outbreak and Brexit. Overall, with the leeway on adjusting the minimum acceptance condition, we think that the bid has a good chance of succeeding. </p></div>

GL Ltd (GLL SP) is an investment holding company with a core business in UK hotel management and operations. On Friday, GL announced a voluntary unconditional cash offer of S$0.70 per share from a wholly-owned subsidiary of Guoco Group Ltd (53 HK). The offer price of S$0.70 per share is a 25.0% premium to the last trading price of S$0.56 per share (14 January). The minimum acceptance condition is the offeror and concert parties hold not less than 90% of the voting rights. GuocoLeisure Assets, which represents 70.84% of outstanding shares, has provided an irrecovable to accept the offer. The minimum acceptance condition can be reduced to more than 50% or waived, subject to the consent of the Securities Industry Council.The modest premium to historical long-term multiples and share prices is unlikely to excite long-term shareholders. The offer price is largely designed to appeal to shareholders looking for a respite from the uncertain prospects of the hotels business due to the COVID-19 outbreak and Brexit. Overall, with the leeway on adjusting the minimum acceptance condition, we think that the bid has a good chance of succeeding. 

GL Limited’s Voluntary Unconditional Offer by Guoco Group

<p><a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> has made a <a href="https://links.sgx.com/FileOpen/Offer%20Announcement.ashx?App=Announcement&amp;FileID=645181" target="_blank" rel="noopener">voluntary conditional cash Offer</a> for 70.84%-held <a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a>.</p>
<p>The Offer Price of S$0.70/share is a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.</p>
<p>This appears a relatively listless Offer premium, pitching GLL at a level below the COVID drop-off in Feb/March last year.</p>
<p>Of greater interest is whether this privatisation attempt is an interim step to reloading (another) take-private Offer for Guoco.</p>
<p>As always, more below the fold.</p>

Guoco Group Ltd (53 HK) has made a voluntary conditional cash Offer for 70.84%-held GL Ltd (GLL SP).
The Offer Price of S$0.70/share is a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.
This appears a relatively listless Offer premium, pitching GLL at a level below the COVID drop-off in Feb/March last year.
Of greater interest is whether this privatisation attempt is an interim step to reloading (another) take-private Offer for Guoco.
As always, more below the fold.

GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco

Equity Bottom-Up

<p>Back on the 4 March, <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0304/2020030400035.pdf" target="_blank" rel="noopener">announced</a> a strategic review of its portfolio. The review was supported by Elliott Management, and was viewed as a tentative truce between the two ahead of an expected court date to arbitrate BEA's alleged relationship with two of its key shareholders, Japan’s <a href="https://www.smartkarma.com/entities/sumitomo-mitsui-financial-gr" target="_blank" data-smartkarma-citation="entities:217:1" rel="noopener">Sumitomo Mitsui Financial (8316 JP)</a> and Spain’s <a href="https://www.smartkarma.com/entities/caixabank-sa" target="_blank" data-smartkarma-citation="entities:21255:1" rel="noopener">CaixaBank SA (CABK SM)</a>. I discussed this development in <em><a href="https://skr.ma/f3hfy" target="_blank" rel="noopener">Elliott &amp; BEA: "Fiefdom" On Pause</a></em>.</p>
<p>Fast forward six and half months and BEA has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0923/2020092300183.pdf" target="_blank" rel="noopener">decided</a> to initiate a "<em>sale process for BEA Life Limited (“BEA Life”) in order to enhance the value of the Bank’s business, improve its financial position and enable its management team to focus on its core banking operations in Hong Kong and Mainland China</em>".  The announcement was supported by Elliott.</p>
<p>BEA added that it would seek to enter into a "<em>long-term exclusive distribution agreement that will provide an ongoing source of revenue for BEA as a distributor of insurance products through its banking platform</em>."</p>
<p>Reportedly BEA could raise US$500mn-US$600mn from the sale, which is roughly in line with the gross written premiums of HK$4.8bn in 2019; and ~5.5x the net insurance premium of HK$826mn in FY19. </p>
<p>BEA said it would further identify opportunities to grow its core businesses   - presumably this already formed part of its forward roadmap. </p>
<p>But does the sale and formation of a so-called bancassurance partnership, make BEA a more attractive company (as a standalone or takeover target); or a less attractive bank as it focuses on is pedestrian traditional banking ops? Or is this simply, just the opening salvo from its ongoing strategy?</p>
<p>As always, more below the fold.</p>

Back on the 4 March, Bank of East Asia (23 HK) announced a strategic review of its portfolio. The review was supported by Elliott Management, and was viewed as a tentative truce between the two ahead of an expected court date to arbitrate BEA's alleged relationship with two of its key shareholders, Japan’s Sumitomo Mitsui Financial (8316 JP) and Spain’s CaixaBank SA (CABK SM). I discussed this development in Elliott &amp; BEA: "Fiefdom" On Pause.
Fast forward six and half months and BEA has decided to initiate a "sale process for BEA Life Limited (“BEA Life”) in order to enhance the value of the Bank’s business, improve its financial position and enable its management team to focus on its core banking operations in Hong Kong and Mainland China".  The announcement was supported by Elliott.
BEA added that it would seek to enter into a "long-term exclusive distribution agreement that will provide an ongoing source of revenue for BEA as a distributor of insurance products through its banking platform."
Reportedly BEA could raise US$500mn-US$600mn from the sale, which is roughly in line with the gross written premiums of HK$4.8bn in 2019; and ~5.5x the net insurance premium of HK$826mn in FY19. 
BEA said it would further identify opportunities to grow its core businesses   - presumably this already formed part of its forward roadmap. 
But does the sale and formation of a so-called bancassurance partnership, make BEA a more attractive company (as a standalone or takeover target); or a less attractive bank as it focuses on is pedestrian traditional banking ops? Or is this simply, just the opening salvo from its ongoing strategy?
As always, more below the fold.

BEA (23 HK): Big Banc Theory And Elliott's Hard Slog

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<p>On the 20 April, <a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied Group Limited (373 HK)</a> (AGL) made an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0420/2020042001582.pdf" target="_blank" rel="noopener">Offer</a> for <a href="https://www.smartkarma.com/entities/allied-properties-hk-ltd" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties Hk (56 HK)</a> (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close. The Offer is Final. The consideration will be split between a $0.42/share Scheme Consideration and $1.50 Scheme Dividend. </p>
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<p>An interim dividend of HK$0.08/share  for the year ended 31st December, 2019, payable on or around 20th May to the shareholders whose names appear on the register on the 8th May, was also added, taking the total payout to $2/share.</p>
<p>In the initial announcement, it was guided for completion around October, suggesting the Scheme doc would include 2020 interim figures, which typically come out late August.</p>
<p>APH has now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0511/2020051100918.pdf" target="_blank" rel="noopener">announced</a> that the "<em>Executive has granted its consent to extend the date of despatch of the Scheme Document to a date no later than 30th June, 2020.</em>"<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0511/2020051100918.pdf" target="_blank" rel="noopener"></a></p>
<p>By issuing the Scheme doc late June, this suggests everything could be wrapped up late August, a full six weeks ahead of the prior indicated schedule.</p>
<p>As always, more below the fold.</p>
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On the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for Allied Properties Hk (56 HK) (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close. The Offer is Final. The consideration will be split between a $0.42/share Scheme Consideration and $1.50 Scheme Dividend. 


An interim dividend of HK$0.08/share  for the year ended 31st December, 2019, payable on or around 20th May to the shareholders whose names appear on the register on the 8th May, was also added, taking the total payout to $2/share.
In the initial announcement, it was guided for completion around October, suggesting the Scheme doc would include 2020 interim figures, which typically come out late August.
APH has now announced that the "Executive has granted its consent to extend the date of despatch of the Scheme Document to a date no later than 30th June, 2020."
By issuing the Scheme doc late June, this suggests everything could be wrapped up late August, a full six weeks ahead of the prior indicated schedule.
As always, more below the fold.









Hong Kong

Guoco Group Limited is an investment holding company with diversified operations across Asia and Europe. Its core businesses include property development and investment, hospitality and leisure, financial services, and principal investments. The company was incorporated in 1990 and is headquartered in Hong Kong.

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Guoco (53 HK)

SIAS Questions GL Limited's Offer: More Bark Than Bite

The SIAS raises many valid points. GLL looks cheap and why it trades through terms. I like Guoco here, as it trades around a one-year discount to...

David Blennerhassett

GL Limited’s Voluntary Unconditional Offer by Guoco Group

GL announced a voluntary unconditional cash offer of S$0.70 per share from Guoco Group. With the leeway on adjusting the minimum acceptance...

Arun George

GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco

Pick up Guoco here, on the expectation this take-private approach for GLL is a precursor to a new Offer being tabled, or simply on the basis Guoco...

David Blennerhassett

BEA (23 HK): Big Banc Theory And Elliott's Hard Slog

Just two months before Elliott Management and Bank Of East Asia (23 HK) head back to court to arbitrate on BEA's purported overarching relationship...

David Blennerhassett

Allied Prop (56 HK)'s Accelerated Offer

On the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for Allied Properties Hk (56 HK) (APH), by way of a Scheme, at $1.92/share...

David Blennerhassett

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