Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>Last week, Hyundai Dept Store Group announced that it will establish a single holding company structure with Hyundai G.F. Holdings controlling all of the group affiliates.</li>
<li>Hyundai G.F. Holdings plans to make an in-kind investment in Hyundai Department Store (HDS) to make Hyundai Green Food and Hyundai Department Store as subsidiaries.</li>
<li>This in-kind investment in HDS and Hyundai Green Food by Hyundai G.F. Holdings is not a deal that adds clear-cut value to Hyundai G.F. Holdings' shareholders. </li>
</ul>


Last week, Hyundai Dept Store Group announced that it will establish a single holding company structure with Hyundai G.F. Holdings controlling all of the group affiliates.
Hyundai G.F. Holdings plans to make an in-kind investment in Hyundai Department Store (HDS) to make Hyundai Green Food and Hyundai Department Store as subsidiaries.
This in-kind investment in HDS and Hyundai Green Food by Hyundai G.F. Holdings is not a deal that adds clear-cut value to Hyundai G.F. Holdings' shareholders. 


Hyundai G.F. Holdings: A Holdco Creation With In-Kind Investment in HDS & Hyundai Green Food

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Murakami to tender stake in <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a>? Maybe the "double arb": i.e. short on swap, long on cash, will tender the cash, remain short the back end.</li>
<li>
<a href="https://www.smartkarma.com/entities/austal-ltd" target="_blank" data-smartkarma-citation="entities:14420:1" rel="noopener">Austal Ltd (ASB AU)</a> rejected (for now) <a href="https://www.smartkarma.com/entities/hanwha-ocean-co-ltd" target="_blank" data-smartkarma-citation="entities:12531:1" rel="noopener">Hanwha Ocean (042660 KS)</a>'s bid based on regulatory concerns.  Hanwha reckons these should not be an issue.</li>
<li>If you can tolerate owning the mobile biz, buy <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten (4755 JP)</a> on dips. If not, avoid Rakuten Group and Rakuten Bank short-term; buy Rakuten Bank on larger dips.</li>
</ul>


Murakami to tender stake in JSR Corp (4185 JP)? Maybe the "double arb": i.e. short on swap, long on cash, will tender the cash, remain short the back end.

Austal Ltd (ASB AU) rejected (for now) Hanwha Ocean (042660 KS)'s bid based on regulatory concerns.  Hanwha reckons these should not be an issue.
If you can tolerate owning the mobile biz, buy Rakuten (4755 JP) on dips. If not, avoid Rakuten Group and Rakuten Bank short-term; buy Rakuten Bank on larger dips.


Last Week in Event SPACE: JSR, Austal, Rakuten, Hyundai Home Shopping, Hanmi Science

Hyundai Home Shopping Network / Event-Driven

<ul>
<li>Yesterday, the 3rd April, <a href="https://www.smartkarma.com/entities/hyundai-g-f-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:19560:1" rel="noopener">Hyundai G.F. Holdings (005440 KS)</a> <a href="https://n.news.naver.com/mnews/article/030/0003194952" target="_blank" rel="noopener">announced</a> it would conduct a Tender Offer for 3mn shares, or 25% of <a href="https://www.smartkarma.com/entities/hyundai-home-shopping-network-corp" target="_blank" data-smartkarma-citation="entities:2357:1" rel="noopener">Hyundai Home Shopping Network (057050 KS)</a> (HHSN).</li>
<li>A successful Tender would lift Holdings stake to 50% from 25% currently, satisfying the <a href="https://www.businesskorea.co.kr/news/articleView.html?idxno=55003" target="_blank" rel="noopener">30% holding company threshold</a> introduced in 2022.</li>
<li>Minimum proration is 33%. Shares popped 13.8% on the news. That looks a bit too aggressive. </li>
</ul>


Yesterday, the 3rd April, Hyundai G.F. Holdings (005440 KS) announced it would conduct a Tender Offer for 3mn shares, or 25% of Hyundai Home Shopping Network (057050 KS) (HHSN).
A successful Tender would lift Holdings stake to 50% from 25% currently, satisfying the 30% holding company threshold introduced in 2022.
Minimum proration is 33%. Shares popped 13.8% on the news. That looks a bit too aggressive. 


Hyundai Home Shopping (057050 KS)'s Partial Offer

<ul>
<li>On 3 April, it was reported that Hyundai G.F. Holdings will be conducting a tender offer of 3 million shares of Hyundai Home Shopping (25% of outstanding shares). </li>
<li>The tender offer price is 64,200 won. The main reason for this tender offer is to meet the regulatory requirement of a holding company by 2025. </li>
<li>We are positive on the tender offer of a 25% stake in Hyundai Home Shopping by Hyundai G.F. Holdings.</li>
</ul>


On 3 April, it was reported that Hyundai G.F. Holdings will be conducting a tender offer of 3 million shares of Hyundai Home Shopping (25% of outstanding shares). 
The tender offer price is 64,200 won. The main reason for this tender offer is to meet the regulatory requirement of a holding company by 2025. 
We are positive on the tender offer of a 25% stake in Hyundai Home Shopping by Hyundai G.F. Holdings.


Tender Offer of 25% of Hyundai Home Shopping Shares by Hyundai GF Holdings

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<ul>
<li>It is somewhat unusual that there is still a spread of over 5%. This likely reflects concerns about the relatively high intensity of allocation risk.</li>
<li>Retail: 30%, Institutions: 16% of float shares (46%). Retailers may contribute 20%, institutions 10-15%. Total tender rate: 30-35%.</li>
<li>In that case, it means that roughly 70% of our holdings could be tendered. And at this level, it seems reasonable enough to target the current spread of 5%.</li>
</ul>


It is somewhat unusual that there is still a spread of over 5%. This likely reflects concerns about the relatively high intensity of allocation risk.
Retail: 30%, Institutions: 16% of float shares (46%). Retailers may contribute 20%, institutions 10-15%. Total tender rate: 30-35%.
In that case, it means that roughly 70% of our holdings could be tendered. And at this level, it seems reasonable enough to target the current spread of 5%.


Estimating Participation Rate for Hyundai HS Tender Offer, Currently at a 5% Spread

South Korea

Hyundai G.F. Holdings Co., Ltd. operates as a office furniture distribution company. The Company produces built in furniture, upcycling waste materials bottles furniture, wood furniture, and other related products. Hyundai G.F. Holdings also offers food, information and technology, groceries sale, and food materials distribution services.

Hyundai G.F. Holdings (005440 KS)

Hyundai G.F. Holdings: A Holdco Creation With In-Kind Investment in HDS & Hyundai Green Food

This in-kind investment in Hyundai Dept Store (HDS) and Hyundai Green Food by Hyundai G.F. Holdings is not a deal that adds clear-cut value to...

Douglas Kim

Last Week in Event SPACE: JSR, Austal, Rakuten, Hyundai Home Shopping, Hanmi Science

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

Hyundai Home Shopping (057050 KS)'s Partial Offer

HHSN is not particularly liquid, trading ~US$1mn/day. Unless you believe pro-ration to be materially higher than 65%, I'd be disinclined to enter...

David Blennerhassett

Tender Offer of 25% of Hyundai Home Shopping Shares by Hyundai GF Holdings

We are positive on the tender offer of a 25% stake in Hyundai Home Shopping by Hyundai G.F. Holdings. Hyundai Home Shopping is trading at only 0.3x...

Douglas Kim

Estimating Participation Rate for Hyundai HS Tender Offer, Currently at a 5% Spread

This post assesses the actual tendering participation rate for the Hyundai Home Shopping tender offer, currently at a 5% spread.

Sanghyun Park