Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a> and <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay (APT AU)</a> have <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02402191-3A571915?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> a firm merger, the completion of which will create Australia's largest-ever buyout, exceeding <a href="https://www.smartkarma.com/entities/unibail-rodamco-se" target="_blank" data-smartkarma-citation="entities:21140:1" rel="noopener">Unibail-Rodamco SE (UL NA)</a>'s 2017 takeover of <a href="https://www.smartkarma.com/entities/westfield-corp" target="_blank" data-smartkarma-citation="entities:896:1" rel="noopener">Westfield Corp (WFD AU)</a> - discussed <a href="https://skr.ma/8TPFU" target="_blank" rel="noopener">here</a>.
Under the terms of the Offer, by way of Scheme, Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay ordinary share.
Based on Square’s closing price of US$247.26 on July 30, 2021, this represents an implied transaction price of ~A$126.21 per Afterpay share, or a premium of ~30.6%.
Following completion of the transaction, Afterpay shareholders are expected to own ~18.5% of the merged entity on a fully diluted basis.
Square may elect to pay 1% of total consideration in cash.
Square has agreed to establish a secondary listing on the ASX to allow Afterpay shareholders to trade Square shares via CHESS.
The merger is tentatively expected to complete in the 1Q22. The Scheme has the unanimous backing of both Boards. 
More below the fold.

Square Inc (SQ US) and Afterpay (APT AU) have announced a firm merger, the completion of which will create Australia's largest-ever buyout, exceeding Unibail-Rodamco SE (UL NA)'s 2017 takeover of Westfield Corp (WFD AU) - discussed here.
Under the terms of the Offer, by way of Scheme, Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay ordinary share.
Based on Square’s closing price of US$247.26 on July 30, 2021, this represents an implied transaction price of ~A$126.21 per Afterpay share, or a premium of ~30.6%.
Following completion of the transaction, Afterpay shareholders are expected to own ~18.5% of the merged entity on a fully diluted basis.
Square may elect to pay 1% of total consideration in cash.
Square has agreed to establish a secondary listing on the ASX to allow Afterpay shareholders to trade Square shares via CHESS.
The merger is tentatively expected to complete in the 1Q22. The Scheme has the unanimous backing of both Boards. 
More below the fold.

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

<ul><li>PayPal had a mixed quarter and reported a 19% top-line growth which was below expectations but managed to deliver an earnings beat.</li><li>The company saw 4.7 billion transactions during the quarter, up 27% as compared to the previous year and its payment transactions per active account were 43.5 million, an improvement of 11% versus the prior year quarter.</li><li>With eBay moving out of the payment platform, PayPal’s payment volumes were hit by about 8 percentage points and the eBay impact might stay in the coming quarters despite the Venmo growth.</li></ul>

PayPal had a mixed quarter and reported a 19% top-line growth which was below expectations but managed to deliver an earnings beat.The company saw 4.7 billion transactions during the quarter, up 27% as compared to the previous year and its payment transactions per active account were 43.5 million, an improvement of 11% versus the prior year quarter.With eBay moving out of the payment platform, PayPal’s payment volumes were hit by about 8 percentage points and the eBay impact might stay in the coming quarters despite the Venmo growth.

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.

<a href="https://www.smartkarma.com/entities/paytm-mobile-solutions-pvt-ltd" target="_blank" data-smartkarma-citation="entities:26149:1" rel="noopener">Paytm (PAYTM IN)</a>, formally known as One97 Communications, is India’s largest payments platform based on the number of consumers, number of merchants, number of transactions and revenue as of 31 March 2021, according to RedSeer. Paytm has an overall payments transaction volume market share of 40%, and wallet payments transaction market share of 65-70% in India as of FY21, according to RedSeer. Paytm’s shareholders include <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> (29.6% of outstanding shares), Softbank Vision Fund (18.3%), <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> (7.2%) and <a href="https://www.smartkarma.com/entities/berkshire-hathaway-inc-cl-b" target="_blank" data-smartkarma-citation="entities:8635:1" rel="noopener">Berkshire Hathaway Inc Cl B (BRK/B US)</a> (2.8%).  Paytm plans to raise up to Rs166.0 billion ($2.2 billion) with a primary/secondary split of 50%/50%, according to the DHRP filing. The Indian Government is highly supportive of digital payments and in 2016, introduced demonetisation efforts through the launch of Unified Payment Interface (UPI) to reduce the reliance on cash. However, India continues to be a cash-driven economy which underscores the opportunity. Due to government initiatives, improving technology, growing awareness, digital payments by value in India are expected to more than double from $20 trillion in FY21 to $40-50 trillion by FY26, according to RedSeer. <div class="content-highlight">As India’s largest payments platform, Paytm is well placed to benefit from this structural tailwind. The advent of UPI has increased competition (Google Pay, PhonePe, MobiKwik) but Paytm is also leveraging its dominance in digital payments to build a synergistic ecosystem of complementary services, resulting in a strong claim to the “super-app” tag. While the COVID-19 pandemic was disruptive particularly to the non-payments business, Paytm should return to growth as the impact of the pandemic wanes and vaccination rates rise in India. Overall, we think that Paytm's fundamentals are attractive. </div>

Paytm (PAYTM IN), formally known as One97 Communications, is India’s largest payments platform based on the number of consumers, number of merchants, number of transactions and revenue as of 31 March 2021, according to RedSeer. Paytm has an overall payments transaction volume market share of 40%, and wallet payments transaction market share of 65-70% in India as of FY21, according to RedSeer. Paytm’s shareholders include Ant Financial Services Group (6688 HK) (29.6% of outstanding shares), Softbank Vision Fund (18.3%), Alibaba Group (BABA US) (7.2%) and Berkshire Hathaway Inc Cl B (BRK/B US) (2.8%).  Paytm plans to raise up to Rs166.0 billion ($2.2 billion) with a primary/secondary split of 50%/50%, according to the DHRP filing. The Indian Government is highly supportive of digital payments and in 2016, introduced demonetisation efforts through the launch of Unified Payment Interface (UPI) to reduce the reliance on cash. However, India continues to be a cash-driven economy which underscores the opportunity. Due to government initiatives, improving technology, growing awareness, digital payments by value in India are expected to more than double from $20 trillion in FY21 to $40-50 trillion by FY26, according to RedSeer. As India’s largest payments platform, Paytm is well placed to benefit from this structural tailwind. The advent of UPI has increased competition (Google Pay, PhonePe, MobiKwik) but Paytm is also leveraging its dominance in digital payments to build a synergistic ecosystem of complementary services, resulting in a strong claim to the “super-app” tag. While the COVID-19 pandemic was disruptive particularly to the non-payments business, Paytm should return to growth as the impact of the pandemic wanes and vaccination rates rise in India. Overall, we think that Paytm's fundamentals are attractive. 

Paytm IPO Initiation: A Payments-Led Super-App

Forensic Analyst

Jason Yap, CFA

Thematic (Sector/Industry)

The BNPL industry witnessed unfettered growth in recent years and Apple's latest foray into this space further validates the immense potential of this industry.  Yet, the BNPL industry's rapid growth has far outpaced the development of relevant regulations and risk management protocols and processes and led to market concerns of a debt fuelled spending binge.  Further, certain questionable business practices have recently been placed under the spotlight.  This article examines the BNPL's industry practices versus traditional lenders and its ESG credentials, and explains why the BNPL industry needs to come under greater regulation.

The BNPL industry witnessed unfettered growth in recent years and Apple's latest foray into this space further validates the immense potential of this industry.  Yet, the BNPL industry's rapid growth has far outpaced the development of relevant regulations and risk management protocols and processes and led to market concerns of a debt fuelled spending binge.  Further, certain questionable business practices have recently been placed under the spotlight.  This article examines the BNPL's industry practices versus traditional lenders and its ESG credentials, and explains why the BNPL industry needs to come under greater regulation. 

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.

<div><a href="https://www.smartkarma.com/entities/paytm-mobile-solutions-pvt-ltd" target="_blank" data-smartkarma-citation="entities:26149:1" rel="noopener">Paytm (PAYTM IN)</a> plans to raise around US$2.2bn via selling a mix of primary and secondary shares in its India IPO. The company is backed by <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> (<a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>), <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and counts <a href="https://www.smartkarma.com/entities/berkshire-hathaway-inc-cl-a" target="_blank" data-smartkarma-citation="entities:1044:1" rel="noopener">Berkshire Hathaway Inc Cl A (BRK/A US)</a> among its investors.</div><div>
Paytm offers payment services, commerce and cloud services, and financial services to 333m consumers and over 21m merchants, as of Mar 21. It offers consumers a wide selection of payment options on the Paytm app. It also offers merchants solutions that allow them to accept payments, acquire and retain consumers, improve their business operations and access financial services.
We covered the company's background and positive aspects of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/paytm-one-97-pre-ipo-the-positives-will-be-one-of-india-s-largest-ipos" target="_blank" rel="noopener">Paytm (One 97) Pre-IPO - The Positives - Will Be One of India’s Largest IPOs</a>.
In this note, we will talk about the not so flattering aspects of the deal.
</div>

Paytm (PAYTM IN) plans to raise around US$2.2bn via selling a mix of primary and secondary shares in its India IPO. The company is backed by Ant Financial Services Group (6688 HK) (Alibaba Group (BABA US)), Softbank Group (9984 JP) and counts Berkshire Hathaway Inc Cl A (BRK/A US) among its investors.
Paytm offers payment services, commerce and cloud services, and financial services to 333m consumers and over 21m merchants, as of Mar 21. It offers consumers a wide selection of payment options on the Paytm app. It also offers merchants solutions that allow them to accept payments, acquire and retain consumers, improve their business operations and access financial services.
We covered the company's background and positive aspects of the deal in our earlier note, Paytm (One 97) Pre-IPO - The Positives - Will Be One of India’s Largest IPOs.
In this note, we will talk about the not so flattering aspects of the deal.


Paytm (One 97) Pre-IPO - The Negatives - Asking Valuations a Long Shot

United States

PayPal Holdings, Inc. operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants. The Company offers online payment solutions. PayPal Holdings serves customers worldwide.

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Paypal Holdings (PYPL US)

Afterpay Ltd (APT AU): All Squared Away

I think it is highly illustrative the co-founders are happy to kick out at price ~22% below the recent high of A$160/share, potentially suggesting...

David Blennerhassett

Paypal Holdings - Investment Thesis

PayPal had a mixed quarter and reported a 19% top-line growth which was below expectations but managed to deliver an earnings beat. The company...

Baptista Research

Paytm IPO Initiation: A Payments-Led Super-App

Paytm plans to raise up to Rs166.0 billion ($2.2 billion) with a primary/secondary split of 50%/50%, according to the DHRP filing. Overall, we...

Arun George

BNPL Industry Through an ESG Lens

The BNPL industry witnessed unfettered growth and far outpaced relevant regulations and protocols, leading to market concerns. This article...

Jason Yap, CFA

Paytm (One 97) Pre-IPO - The Negatives - Asking Valuations a Long Shot

Paytm (PAYTM IN) plans to raise around US$2.2bn via its India IPO. The company is backed by Ant (6688 HK) (Baba (BABA US)), Softbank (9984 JP) and...

Sumeet Singh

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