Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Futu Holdings Ltd / Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/27858" target="_blank" data-smartkarma-citation="entities:27858:1" rel="noopener">Futu Holdings Ltd (FHL US)</a> aims to raise around US$1.7bn to support its margin financing and other businesses.</p>
<p>We covered the previous placement which took place in Aug 2020 in:</p>
<p><a href="https://www.smartkarma.com/insights/futu-holdings-placement-riding-high-on-momentum" target="_blank" rel="noopener">Futu Holdings Placement - Riding High on Momentum</a></p>
</div><div><p>We also covered the company's IPO in 2019: </p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/futu-holdings-pre-ipo-great-metrics-but-in-a-commoditised-industry" target="_blank" rel="noopener">Futu Holdings Pre-IPO - Great Metrics but in a Commoditised Industry</a>, </li>
<li>
<a href="https://www.smartkarma.com/insights/futu-holdings-pre-ipo-fy18-updates-and-quick-thoughts-on-valuation" target="_blank" rel="noopener">Futu Holdings Pre-IPO - FY18 Updates And Quick Thoughts on Valuation</a>,</li>
<li>
<a href="https://www.smartkarma.com/insights/futu-holdings-ipo-given-the-team-execution-and-backers-might-be-worth-a-look-at-the-low-end" target="_blank" rel="noopener">Futu Holdings IPO - Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End</a>, and</li>
<li><a href="https://www.smartkarma.com/insights/futu-holdings-ipo-quick-note-comparison-with-tiger-brokers-same-market-different-economics" target="_blank" rel="noopener">Futu Holdings IPO Quick Note - Comparison with Tiger Brokers - Same Market, Different Economics</a></li>
<li><a href="https://www.smartkarma.com/insights/futu-holdings-ipo-trading-update-might-be-trading-a-little-too-high" target="_blank" rel="noopener">Futu Holdings IPO Trading Update - Might Be Trading a Little Too High</a></li>
</ul></div><div><p>In this note, we will talk about the deal dynamics.</p></div>


Futu Holdings Ltd (FHL US) aims to raise around US$1.7bn to support its margin financing and other businesses.
We covered the previous placement which took place in Aug 2020 in:
Futu Holdings Placement - Riding High on Momentum
We also covered the company's IPO in 2019: 

Futu Holdings Pre-IPO - Great Metrics but in a Commoditised Industry, 

Futu Holdings Pre-IPO - FY18 Updates And Quick Thoughts on Valuation,

Futu Holdings IPO - Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End, and
Futu Holdings IPO Quick Note - Comparison with Tiger Brokers - Same Market, Different Economics
Futu Holdings IPO Trading Update - Might Be Trading a Little Too High
In this note, we will talk about the deal dynamics.

Futu Holdings Placement - Very Strong Momentum but Previous Deal Did Nothing

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>In the follow-on issue, the primary portion announced by <a href="https://www.smartkarma.com/entities/xp-inc" target="_blank" data-smartkarma-citation="entities:28619:1" rel="noopener">XP Inc (XP US)</a>  is small relative to its current market value (c 1.5%), but coupled with the Itaú partial disposal of a maximum 4.3% stake in XP, it creates a clear share over-hang</li>
<li>In addition, <a href="https://www.smartkarma.com/entities/itau-unibanco-holding-sa-9d47d196-e503-471b-a84e-ca4401033062" target="_blank" data-smartkarma-citation="entities:24550:1" rel="noopener">Itau Unibanco Holding Sa (ITUB4 BZ)</a>’s spin-off of its remaining stake in XP (c 41.2% post follow-on) into single-purpose company named NewCo was approved by its board on 26<sup>th</sup> November, and shares in the forthcoming NewCo are exempt from any lock-up agreement</li>
<li>HoldCo <a href="https://www.smartkarma.com/entities/itausa-investimentos-itau-pr" target="_blank" data-smartkarma-citation="entities:24513:1" rel="noopener">Itausa-Investimentos Itau-Pr (ITSA4 BZ)</a> will become a large shareholder in XP post Itaú Unibanco’s spin-off, and although it has stated that it does not intend to dispose of its stake in the short term, Itausa does not consider the XP stake as a long term, strategic holding</li>
<li>The spin-off, lack of lock-up for spun-off shares and Itausa’s non-strategic classification of its XP holding creates further medium term over-hang for XP shares, in our view, post the follow-on issue; add to this the challenging fundamental outlook (especially related to the IFA “arms race”) and XP’s demanding valuations, it all contributes to our caution on XP shares</li>
<li>We prefer indirect, and diluted, exposure through holdco Itausa, in which we estimate Itausa will have an 15.6% economic stake in XP post follow-on issue and NewCo formation</li>
<li>Risks to our view include better than expected fundamental performance by XP, and less than expected pressure on costs related to incentives for IFAs, which would continue to drive premium growth and justify the premium multiples, and smaller than expected secondary share offerings in XP over the medium term</li>
</ul>


In the follow-on issue, the primary portion announced by XP Inc (XP US)  is small relative to its current market value (c 1.5%), but coupled with the Itaú partial disposal of a maximum 4.3% stake in XP, it creates a clear share over-hang
In addition, Itau Unibanco Holding Sa (ITUB4 BZ)’s spin-off of its remaining stake in XP (c 41.2% post follow-on) into single-purpose company named NewCo was approved by its board on 26th November, and shares in the forthcoming NewCo are exempt from any lock-up agreement
HoldCo Itausa-Investimentos Itau-Pr (ITSA4 BZ) will become a large shareholder in XP post Itaú Unibanco’s spin-off, and although it has stated that it does not intend to dispose of its stake in the short term, Itausa does not consider the XP stake as a long term, strategic holding
The spin-off, lack of lock-up for spun-off shares and Itausa’s non-strategic classification of its XP holding creates further medium term over-hang for XP shares, in our view, post the follow-on issue; add to this the challenging fundamental outlook (especially related to the IFA “arms race”) and XP’s demanding valuations, it all contributes to our caution on XP shares
We prefer indirect, and diluted, exposure through holdco Itausa, in which we estimate Itausa will have an 15.6% economic stake in XP post follow-on issue and NewCo formation
Risks to our view include better than expected fundamental performance by XP, and less than expected pressure on costs related to incentives for IFAs, which would continue to drive premium growth and justify the premium multiples, and smaller than expected secondary share offerings in XP over the medium term


XP (XP US) Follow-On Issue Highlights Over-Hang, Potential for More Share Sales Post Itaú Spin-Off

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

Private Capital Markets

<p><a href="https://www.smartkarma.com/entities/zerodha" target="_blank" data-smartkarma-citation="entities:29664:1" rel="noopener">Zerodha (ZERO IN)</a> is attractively placed in the Indian Broking Industry. The core focus on both, the concept of self-service and a tech-savvy trader/investor has helped Zerodha gain market share which it is likely to maintain, in spite of competition inching up. With one of the lowest penetration of shares as a percentage of household savings, the industry dynamics remain favourable. </p>
<p>With presence across all asset classes for trading/investing and future plans to offer US Equities to clients and asset management services, Zerodha is likely to remain the force to reckon with. </p>

Zerodha (ZERO IN) is attractively placed in the Indian Broking Industry. The core focus on both, the concept of self-service and a tech-savvy trader/investor has helped Zerodha gain market share which it is likely to maintain, in spite of competition inching up. With one of the lowest penetration of shares as a percentage of household savings, the industry dynamics remain favourable. 
With presence across all asset classes for trading/investing and future plans to offer US Equities to clients and asset management services, Zerodha is likely to remain the force to reckon with. 

<div><p><a href="https://www.smartkarma.com/entities/27858" target="_blank" data-smartkarma-citation="entities:27858:1" rel="noopener">Futu Holdings Ltd (FHL US)</a> aims to raise around US$300m to support its margin financing and other businesses.</p></div><div><p>We had covered the company's IPO in 2019: </p></div><div><ul>
<li>
<a href="https://www.smartkarma.com/insights/futu-holdings-pre-ipo-great-metrics-but-in-a-commoditised-industry" target="_blank" rel="noopener">Futu Holdings Pre-IPO - Great Metrics but in a Commoditised Industry</a>, </li>
<li>
<a href="https://www.smartkarma.com/insights/futu-holdings-pre-ipo-fy18-updates-and-quick-thoughts-on-valuation" target="_blank" rel="noopener">Futu Holdings Pre-IPO - FY18 Updates And Quick Thoughts on Valuation</a>,</li>
<li>
<a href="https://www.smartkarma.com/insights/futu-holdings-ipo-given-the-team-execution-and-backers-might-be-worth-a-look-at-the-low-end" target="_blank" rel="noopener">Futu Holdings IPO - Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End</a>, and</li>
<li><a href="https://www.smartkarma.com/insights/futu-holdings-ipo-quick-note-comparison-with-tiger-brokers-same-market-different-economics" target="_blank" rel="noopener">Futu Holdings IPO Quick Note - Comparison with Tiger Brokers - Same Market, Different Economics</a></li>
<li><a href="https://www.smartkarma.com/insights/futu-holdings-ipo-trading-update-might-be-trading-a-little-too-high" target="_blank" rel="noopener">Futu Holdings IPO Trading Update - Might Be Trading a Little Too High</a></li>
</ul></div><div><p>The shares are now trading 3x above the listing price with all of the gains coming over the past four months.</p></div>

Futu Holdings Ltd (FHL US) aims to raise around US$300m to support its margin financing and other businesses.We had covered the company's IPO in 2019: 

Futu Holdings Pre-IPO - Great Metrics but in a Commoditised Industry, 

Futu Holdings Pre-IPO - FY18 Updates And Quick Thoughts on Valuation,

Futu Holdings IPO - Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End, and
Futu Holdings IPO Quick Note - Comparison with Tiger Brokers - Same Market, Different Economics
Futu Holdings IPO Trading Update - Might Be Trading a Little Too High
The shares are now trading 3x above the listing price with all of the gains coming over the past four months.

Futu Holdings Placement - Riding High on Momentum

<p><a href="https://www.smartkarma.com/entities/27957" target="_blank" data-smartkarma-citation="entities:27957:1">Up Fintech (TIGR US)</a>'s IPO was priced at US$8/share, above its range of US$5-7/ADS raising at total of US$111m, including the proceeds from the private placement with <a href="https://www.smartkarma.com/entities/13335" target="_blank" data-smartkarma-citation="entities:13335:1">Interactive Brokers Group, Inc (IBKR US)</a>. </p><p>In my earlier insights, I looked at the company's background,  past financial performance, scored the deal on our IPO framework and compared it to <a href="https://www.smartkarma.com/entities/27858" target="_blank" data-smartkarma-citation="entities:27858:1">Futu Holdings Ltd (FHL US)</a>: </p><ul>
<li><a href="https://www.smartkarma.com/insights/futu-holdings-ipo-quick-note-comparison-with-tiger-brokers-same-market-different-economics" target="_blank">Futu Holdings IPO Quick Note - Comparison with Tiger Brokers - Same Market, Different Economics</a></li>
<li><a href="https://www.smartkarma.com/insights/up-fintech-tiger-brokers-pre-ipo-quick-note-much-too-reliant-on-ibkr" target="_blank">Up Fintech (Tiger Brokers) Pre-IPO Quick Note - Much Too Reliant on IBKR</a></li>
<li><a href="https://www.smartkarma.com/insights/up-fintech-tiger-brokers-ipo-quick-take-it-s-not-like-futu-won-t-perform-like-it-either" target="_blank">Up Fintech (Tiger Brokers) IPO Quick Take - It’s Not like Futu, Won’t Perform like It Either</a></li>
</ul><p>In this insight, I will re-visit some of the deal dynamics, comment on share price drivers and provide a table with implied valuations.</p>

Up Fintech (TIGR US)'s IPO was priced at US$8/share, above its range of US$5-7/ADS raising at total of US$111m, including the proceeds from the private placement with Interactive Brokers Group, Inc (IBKR US). In my earlier insights, I looked at the company's background,  past financial performance, scored the deal on our IPO framework and compared it to Futu Holdings Ltd (FHL US): 
Futu Holdings IPO Quick Note - Comparison with Tiger Brokers - Same Market, Different Economics
Up Fintech (Tiger Brokers) Pre-IPO Quick Note - Much Too Reliant on IBKR
Up Fintech (Tiger Brokers) IPO Quick Take - It’s Not like Futu, Won’t Perform like It Either
In this insight, I will re-visit some of the deal dynamics, comment on share price drivers and provide a table with implied valuations.

Up Fintech (Tiger Brokers) IPO Trading Update - First Day Volume Was Higher than Futu, Close to QTT

United States

Interactive Brokers Group, Inc. is an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures, and foreign exchange instruments.

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Interactive Brokers Group, Inc (IBKR US)

Futu Holdings Placement - Very Strong Momentum but Previous Deal Did Nothing

Futu Holdings Ltd (FHL US) aims to raise around US$1.7bn to support its margin financing and other businesses. In this note we will talk about the...

Sumeet Singh

Zerodha | India's Own Robinhood

What’s the primary reason for the Insight (price action, news flow, upcoming events etc)? What action would you suggest to an investor?

Pranav Bhavsar

Futu Holdings Placement - Riding High on Momentum

Futu Holdings Ltd (FHL US) aims to raise around US$300m to support its margin financing and other businesses.We had covered the company's IPO in...

Sumeet Singh

Up Fintech (Tiger Brokers) IPO Trading Update - First Day Volume Was Higher than Futu, Close to QTT

Up Fintech (TIGR US)'s IPO was priced at US$8/share, above its range of US$5-7/ADS raising at total of US$111m, including the proceeds from the...

Sumeet Singh

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52-week Range

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Futu Holdings Placement - Very Strong Momentum but Previous Deal Did Nothing

Futu Holdings Ltd (FHL US) aims to raise around US$1.7bn to support its margin financing and other businesses. In this note we will talk about the...

Sumeet Singh

XP (XP US) Follow-On Issue Highlights Over-Hang, Potential for More Share Sales Post Itaú Spin-Off

Post XP's follow-on, we see the spin-off, lack of lock-up for spun-off shares and Itausa’s non-strategic view of its XP shares adding to risk of...

Victor Galliano

Zerodha | India's Own Robinhood

What’s the primary reason for the Insight (price action, news flow, upcoming events etc)? What action would you suggest to an investor?

Pranav Bhavsar

Futu Holdings Placement - Riding High on Momentum

Futu Holdings Ltd (FHL US) aims to raise around US$300m to support its margin financing and other businesses.We had covered the company's IPO in...

Sumeet Singh

Up Fintech (Tiger Brokers) IPO Trading Update - First Day Volume Was Higher than Futu, Close to QTT

Up Fintech (TIGR US)'s IPO was priced at US$8/share, above its range of US$5-7/ADS raising at total of US$111m, including the proceeds from the...

Sumeet Singh