Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Today is the last day of trading for the Naspers Exchange Offer before it goes ex- tomorrow. A number of investors and traders will find it impossible to buy and offer their shares through normal settlement mechanisms and could only do so on swap as normal corporate action windows would have closed.</p><p>That said, after a brief hiccup this morning, the spread is trading quite stably where it was yesterday at 4.8-5.3%. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/223/127/original/Screenshot+2021-08-10+at+7.16.18+PM.png?1628594193" class="editor-image img-responsive" data-smartkarma-image-id="223127"></figure><p></p></section><p>Going forward, the process of spread change, and flow impacts will hop around a bit, and this is a brief guide to that timing and expected influence.</p>

Today is the last day of trading for the Naspers Exchange Offer before it goes ex- tomorrow. A number of investors and traders will find it impossible to buy and offer their shares through normal settlement mechanisms and could only do so on swap as normal corporate action windows would have closed.That said, after a brief hiccup this morning, the spread is trading quite stably where it was yesterday at 4.8-5.3%. Going forward, the process of spread change, and flow impacts will hop around a bit, and this is a brief guide to that timing and expected influence.

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> has seen a rapid rise in ownership among global emerging market investors.</p><p><a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> now sits among the big players in the sector, just behind <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> and in line with <a href="https://www.smartkarma.com/entities/netease-inc-adr" target="_blank" data-smartkarma-citation="entities:17203:1" rel="noopener">NetEase Inc (NTES US).</a></p><p>Recent Activity shows <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> capturing the most new investors in 2021 among South Korean peers, with the funds invested percentage rising by 5% - marginally ahead of <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> and <a href="https://www.smartkarma.com/entities/lx-holdings" target="_blank" data-smartkarma-citation="entities:33384:1" rel="noopener">LX Holdings (383800 KS).</a></p><p>All this points to <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> as a high conviction holding among active EM managers, and whilst a combination of record investment and price levels leaves <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> vulnerable to consolidation, there are many previous investors who may pick up the slack if prices fall.</p>

Naver Corp (035420 KS) has seen a rapid rise in ownership among global emerging market investors.Naver Corp (035420 KS) now sits among the big players in the sector, just behind Naspers (NPN SJ) and in line with NetEase Inc (NTES US).Recent Activity shows Naver Corp (035420 KS) capturing the most new investors in 2021 among South Korean peers, with the funds invested percentage rising by 5% - marginally ahead of Kakao Corp (035720 KS) and LX Holdings (383800 KS).All this points to Naver Corp (035420 KS) as a high conviction holding among active EM managers, and whilst a combination of record investment and price levels leaves Naver Corp (035420 KS) vulnerable to consolidation, there are many previous investors who may pick up the slack if prices fall.

Naver Corp (035420 KS):  Soaring in to the Big League

<p>On Friday, the <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> EGM to consider and approve the transaction and cross-shareholding which comes from Prosus launching a Proposed Voluntary Exchange Offer to shareholders of <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> was held. </p><p>The results look like the table below (Prosus announcement <a href="https://www.share-exchange-offer.com/wp-content/uploads/2021/07/prosus-announcement.pdf" target="_blank" rel="noopener">link</a>). If we assume that the A Share holders voted for the deal, and Naspers voted for the deal, that left 316mm other votes out of the 432.5mm shares eligible to vote which is a 73% turnout. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/217/902/original/Screenshot+2021-07-12+at+1.52.50+PM.png?1626069193" class="editor-image img-responsive" data-smartkarma-image-id="217902"></figure><p></p></section><p>While this deal was never going to not get passed in the EGM, because Naspers management and Prosus management control are the same, if it had been an overwhelming loss in terms of minority shareholder support, they might have thought about reconsidering their support for the project. </p><p>It was not an overwhelming defeat, but it was not overwhelming support either. It is 52.83% of minorities FOR, 46.51% AGAINST. Based on this nominally being a majority of the minority, one should expect this to go ahead. </p><p>That meant that the Prospectus would be announced today. And it has been (<a href="https://www.share-exchange-offer.com/wp-content/uploads/2021/07/prosus-prospectus.pdf" target="_blank" rel="noopener">link</a>). And the Exchange Offer ends on 13 August 2021. The new shares of Prosus will start trading on the 16th of August on the JSE, A2X, and Euronext Amsterdam. </p>

On Friday, the Prosus (PRX NA) EGM to consider and approve the transaction and cross-shareholding which comes from Prosus launching a Proposed Voluntary Exchange Offer to shareholders of Naspers (NPN SJ) was held. The results look like the table below (Prosus announcement link). If we assume that the A Share holders voted for the deal, and Naspers voted for the deal, that left 316mm other votes out of the 432.5mm shares eligible to vote which is a 73% turnout. While this deal was never going to not get passed in the EGM, because Naspers management and Prosus management control are the same, if it had been an overwhelming loss in terms of minority shareholder support, they might have thought about reconsidering their support for the project. It was not an overwhelming defeat, but it was not overwhelming support either. It is 52.83% of minorities FOR, 46.51% AGAINST. Based on this nominally being a majority of the minority, one should expect this to go ahead. That meant that the Prospectus would be announced today. And it has been (link). And the Exchange Offer ends on 13 August 2021. The new shares of Prosus will start trading on the 16th of August on the JSE, A2X, and Euronext Amsterdam. 

Prosus EGM Approves Partial Offer for Naspers - Next Steps Interesting, Part I

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

<div><p><a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a>  aims to raise US$1.1bn in its upcoming India IPO, which will be launched next week. This would be the largest listing in India from the technology sector.</p></div><div><p>Zomato operates a technology platform that provides services for restaurant partners, customers, and delivery partners. During FY20, Zomato recorded 41.5m average MAU and was one of the leading Food Services platforms in India, in terms of value of goods sold, according to RedSeer. As of 31 Dec 20, it had a presence in 526 Indian cities and had 350,174 active restaurant listings.</p></div><div><p>We have covered some aspects of the deal in our earlier notes  <a href="https://www.smartkarma.com/insights/zomato-pre-ipo-filings-lack-narrative-a-little-bit-of-history-helps" target="_blank" rel="noopener">Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps </a>and <a href="https://www.smartkarma.com/insights/zomato-pre-ipo-food-delivery-revenue-was-probably-up-16x" target="_blank" rel="noopener">Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x.</a></p></div><div><p>In this note, we will undertake a peer comparison with its global peers and its main local peer.</p></div>

Zomato (ZOM IN)  aims to raise US$1.1bn in its upcoming India IPO, which will be launched next week. This would be the largest listing in India from the technology sector.Zomato operates a technology platform that provides services for restaurant partners, customers, and delivery partners. During FY20, Zomato recorded 41.5m average MAU and was one of the leading Food Services platforms in India, in terms of value of goods sold, according to RedSeer. As of 31 Dec 20, it had a presence in 526 Indian cities and had 350,174 active restaurant listings.We have covered some aspects of the deal in our earlier notes  Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps and Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x.In this note, we will undertake a peer comparison with its global peers and its main local peer.

Zomato Pre-IPO - Peer Comparison - Listed and Domestic

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Thematic (Sector/Industry)

<p>This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. </p><p><strong><em>Companies mentioned this week:</em></strong></p><p><a href="https://www.smartkarma.com/entities/saudi-aramco" target="_blank" data-smartkarma-citation="entities:27317:1" rel="noopener">Saudi Aramco (ARAMCO AB)</a>, <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, GlobalFoundries, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/e-mart-inc" target="_blank" data-smartkarma-citation="entities:6993:1" rel="noopener">E Mart Inc (139480 KS)</a></p>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. Companies mentioned this week:Saudi Aramco (ARAMCO AB), Hyundai Motor Co (005380 KS), GlobalFoundries, Samsung Electronics (005930 KS), E Mart Inc (139480 KS)

Global Emerging Markets Weekly: 25 June 2021

South Africa

Naspers Limited operates in the technology industry. The Company invests in global internet companies across the world.

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Naspers (NPN SJ)

Naspers/Prosus - Now We Go Ex-Offer

Naspers goes ex-Offer on Wednesday 11 August. The Offer closes 13 August. We could see a price dip on NPN between, which could encourage pro-ration...

Travis Lundy

Naver Corp (035420 KS): Soaring in to the Big League

Naver Corp has seen a rapid rise in ownership among global EM investors. Naver Corp now sits among the big players in the sector, just behind...

Steven Holden

Prosus EGM Approves Partial Offer for Naspers - Next Steps Interesting, Part I

Prosus approved the Naspers tender despite proxy opposition. Now it is Naspers' holders' turn to make their bets. Details in the prospectus promise...

Travis Lundy

Zomato Pre-IPO - Peer Comparison - Listed and Domestic

Zomato (ZOM IN) aims to raise US$1.1bn in its upcoming India IPO, which will be launched next week. This would be the largest listing in India...

Sumeet Singh

Global Emerging Markets Weekly: 25 June 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

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