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.

Event-Driven

<a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> announced a final and improved privatisation offer from <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a>. Keppel’s final offer bumps up the cash consideration 30% from S$0.668 cash per SPH share to S$0.868 cash per SPH share while keeping unchanged 0.596 <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> units per SPH share along with SPH distributing-in-specie 0.782 <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a> units per SPH share. Based on the last close price of Keppel REIT and SPH REIT, the total consideration is S$2.351 per SPH share, which is a 12.0% premium to the previous Keppel offer of S$2.099 per SPH share and a 12.0% premium to Cuscaden’s offer of S$2.10 cash per SPH share.As discussed in <a href="https://www.smartkarma.com/insights/sph-s-rival-offer-from-cuscaden" target="_blank" data-smartkarma-citation="insights:59774" rel="noopener">SPH’s Rival Offer from Cuscaden</a>, on 29 October, SPH received a competing privatisation offer from Cuscaden at S$2.10 cash per SPH share. Since the announcement, SPH has facilitated due diligence to obtain a revised proposal from Cuscaden.Keppel’s final offer requires SPH to hold its EGM and scheme meeting to vote on Keppel’s scheme by 8 December. Keppel has obtained all regulatory approvals and waived the MAC clause. SPH has recognised that Keppel’s final offer is superior to Cuscaden’s offer and will call for the scheme meeting.We previously noted that Cuscaden’s offer has greater certainty of value as it is all cash, eliminates the risk of changing REIT unit prices (Keppel REIT and SPH REIT) and does any require further shareholders' approval on the part of Cuscaden (Keppel’s offer requires approval from Keppel shareholders). However, since the announcement of Cuscaden’s offer, SPH REIT and Keppel REIT unit prices have increased by 4.6% and 1.8% respectively, increasing the combined value of the REIT units by S$0.047 per SPH share. SPH REIT also has a floor price due to the minimum chain offer price of S$0.964 per SPH REIT unit which Cuscaden is obliged to offer under its proposal. Crucially, the rising REIT unit prices had lifted Keppel’s previous offer ($2.15 at last close prices) above Cuscaden’s offer.  <div class="content-highlight">Keppel’s final offer is attractive in the context of SPH’s historical long-term multiples and share prices. Based on the SPH REIT and Keppel REIT traded prices since the announcement of Keppel’s previous offer, Keppel’s final offer implies a range of S$2.201-2.355 per SPH share. Under the terms of the final Keppel proposal, any competing offer by way of a scheme of arrangement must be signed by 16 November and any competing general offer must be announced by 1 December. Barring a material decline in the REIT unit prices, we think it will be difficult for Cuscaden to launch a more compelling all-cash offer. Overall, we think that Keppel’s final offer has a good probability to be the winning bid.  </div>

Singapore Press Holdings (SPH SP) announced a final and improved privatisation offer from Keppel Corp (KEP SP). Keppel’s final offer bumps up the cash consideration 30% from S$0.668 cash per SPH share to S$0.868 cash per SPH share while keeping unchanged 0.596 Keppel REIT (KREIT SP) units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT (SPHREIT SP) units per SPH share. Based on the last close price of Keppel REIT and SPH REIT, the total consideration is S$2.351 per SPH share, which is a 12.0% premium to the previous Keppel offer of S$2.099 per SPH share and a 12.0% premium to Cuscaden’s offer of S$2.10 cash per SPH share.As discussed in SPH’s Rival Offer from Cuscaden, on 29 October, SPH received a competing privatisation offer from Cuscaden at S$2.10 cash per SPH share. Since the announcement, SPH has facilitated due diligence to obtain a revised proposal from Cuscaden.Keppel’s final offer requires SPH to hold its EGM and scheme meeting to vote on Keppel’s scheme by 8 December. Keppel has obtained all regulatory approvals and waived the MAC clause. SPH has recognised that Keppel’s final offer is superior to Cuscaden’s offer and will call for the scheme meeting.We previously noted that Cuscaden’s offer has greater certainty of value as it is all cash, eliminates the risk of changing REIT unit prices (Keppel REIT and SPH REIT) and does any require further shareholders' approval on the part of Cuscaden (Keppel’s offer requires approval from Keppel shareholders). However, since the announcement of Cuscaden’s offer, SPH REIT and Keppel REIT unit prices have increased by 4.6% and 1.8% respectively, increasing the combined value of the REIT units by S$0.047 per SPH share. SPH REIT also has a floor price due to the minimum chain offer price of S$0.964 per SPH REIT unit which Cuscaden is obliged to offer under its proposal. Crucially, the rising REIT unit prices had lifted Keppel’s previous offer ($2.15 at last close prices) above Cuscaden’s offer.  Keppel’s final offer is attractive in the context of SPH’s historical long-term multiples and share prices. Based on the SPH REIT and Keppel REIT traded prices since the announcement of Keppel’s previous offer, Keppel’s final offer implies a range of S$2.201-2.355 per SPH share. Under the terms of the final Keppel proposal, any competing offer by way of a scheme of arrangement must be signed by 16 November and any competing general offer must be announced by 1 December. Barring a material decline in the REIT unit prices, we think it will be difficult for Cuscaden to launch a more compelling all-cash offer. Overall, we think that Keppel’s final offer has a good probability to be the winning bid.  

Keppel’s Final Offer for SPH - Game, Set and Match?

Today, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> announced a competing privatisation offer from Cuscaden at S$2.10 cash per SPH share, which is a 40.0% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review), an 11.7% premium to the share price of S$1.88 on 30 July (last trading day prior to <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a>’s offer) and a 5.5% premium to the share price of S$1.99 on 28 October (last close prior to the trading halt). As discussed in <a href="https://www.smartkarma.com/insights/sph-s-privatisation-by-keppel" target="_blank" data-smartkarma-citation="insights:55402" rel="noopener">SPH’s Privatisation by Keppel</a>, on 2 August, SPH announced a privatisation offer from Keppel. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>, the total consideration is S$2.104 per SPH share, a whisker above Cuscaden’s all-cash offer.  The two privatisation proposals are the culmination of the SPH’s strategic review to unlock shareholder value. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Shareholder approval for the media business restructuring was obtained on 10 September and is expected to be completed in December. While Cuscaden’s offer is broadly similar in value to Keppel’s offer, Cuscaden’s offer may be more appealing particularly to minorities. Cuscaden’s offer has greater certainty of value as it is all cash, eliminates the risk of changing REIT unit prices (Keppel REIT and SPH REIT) and does any require further shareholders' approval on the part of Cuscaden (Keppel’s offer requires approval from Keppel shareholders). Cuscaden’s offer will also not be reduced by the S$34 million break fee payable to Keppel. SPH responded to Cuscaden’s offer by stating that it is "not a firm offer" and it has "not entered into any definitive or binding agreement" with Cuscaden. Keppel responded to Cuscaden’s offer by stating that “we are reviewing the matter and make an announcement at an appropriate time.”<div class="content-highlight">In the event of a competing offer, Keppel has a switch option to proceed with the acquisition by way of an offer in lieu of proceeding with the acquisition by way of the scheme. We previously noted that the acquisition of SPH aligns with Keppel’s Vision 2030 of improving earnings quality, increasing scale and pursuing new growth initiatives. The modest premium of both competing offers to SPH’s historical long-term multiples and share prices suggests that there is room for Keppel to bump its offer and start a bidding war. </div>

Today, Singapore Press Holdings (SPH SP) announced a competing privatisation offer from Cuscaden at S$2.10 cash per SPH share, which is a 40.0% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review), an 11.7% premium to the share price of S$1.88 on 30 July (last trading day prior to Keppel Corp (KEP SP)’s offer) and a 5.5% premium to the share price of S$1.99 on 28 October (last close prior to the trading halt). As discussed in SPH’s Privatisation by Keppel, on 2 August, SPH announced a privatisation offer from Keppel. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of Keppel REIT (KREIT SP) and SPH REIT (SPHREIT SP), the total consideration is S$2.104 per SPH share, a whisker above Cuscaden’s all-cash offer.  The two privatisation proposals are the culmination of the SPH’s strategic review to unlock shareholder value. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Shareholder approval for the media business restructuring was obtained on 10 September and is expected to be completed in December. While Cuscaden’s offer is broadly similar in value to Keppel’s offer, Cuscaden’s offer may be more appealing particularly to minorities. Cuscaden’s offer has greater certainty of value as it is all cash, eliminates the risk of changing REIT unit prices (Keppel REIT and SPH REIT) and does any require further shareholders' approval on the part of Cuscaden (Keppel’s offer requires approval from Keppel shareholders). Cuscaden’s offer will also not be reduced by the S$34 million break fee payable to Keppel. SPH responded to Cuscaden’s offer by stating that it is "not a firm offer" and it has "not entered into any definitive or binding agreement" with Cuscaden. Keppel responded to Cuscaden’s offer by stating that “we are reviewing the matter and make an announcement at an appropriate time.”In the event of a competing offer, Keppel has a switch option to proceed with the acquisition by way of an offer in lieu of proceeding with the acquisition by way of the scheme. We previously noted that the acquisition of SPH aligns with Keppel’s Vision 2030 of improving earnings quality, increasing scale and pursuing new growth initiatives. The modest premium of both competing offers to SPH’s historical long-term multiples and share prices suggests that there is room for Keppel to bump its offer and start a bidding war. 

<a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a>/SPH announced a privatisation offer from <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a>. Keppel is taking private SPH through via a scheme of arrangement. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>, the total consideration is S$2.099 per SPH share, which is a 39.9% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review) and an 11.6% premium to the share price of S$1.88 on 30 July 2021 (last trading day). The privatisation proposal is the culmination of the SPH’s strategic review to unlock shareholder value. Keppel's offer was the best offer from several proposals evaluated, according to SPH management. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Post completion of the media business restructuring (requires approval at the EGM in Aug-Sep), SPH would be released from NPPA restrictions including the 5% shareholding cap restriction. Due to the impending lifting of the 5% shareholding cap, the SPH Board's preference was an offer for the whole SPH, to ensure the emergence of a controlling shareholder.<div class="content-highlight">The key conditions for the successful privatisation are the completion of the media business restructuring, regulatory approval, SPH and Keppel shareholder approval. The modest premium/discount to historical long-term multiples and share prices is unlikely to excite long-term SPH shareholders. The offer price is largely designed to appeal to SPH shareholders lacking patience for SPH to unlock value through capital recycling (such as a listing of PBSA assets, disposal of investments), a post-COVID-19 recovery particularly in its property businesses and improving earnings quality through diversifying into defensive assets. Overall, while the implied offer price is not a knockout bid, it is ok in the context of our SoTP valuation (post-media business restructuring). </div>

Singapore Press Holdings (SPH SP)/SPH announced a privatisation offer from Keppel Corp (KEP SP). Keppel is taking private SPH through via a scheme of arrangement. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of Keppel REIT (KREIT SP) and SPH REIT (SPHREIT SP), the total consideration is S$2.099 per SPH share, which is a 39.9% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review) and an 11.6% premium to the share price of S$1.88 on 30 July 2021 (last trading day). The privatisation proposal is the culmination of the SPH’s strategic review to unlock shareholder value. Keppel's offer was the best offer from several proposals evaluated, according to SPH management. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Post completion of the media business restructuring (requires approval at the EGM in Aug-Sep), SPH would be released from NPPA restrictions including the 5% shareholding cap restriction. Due to the impending lifting of the 5% shareholding cap, the SPH Board's preference was an offer for the whole SPH, to ensure the emergence of a controlling shareholder.The key conditions for the successful privatisation are the completion of the media business restructuring, regulatory approval, SPH and Keppel shareholder approval. The modest premium/discount to historical long-term multiples and share prices is unlikely to excite long-term SPH shareholders. The offer price is largely designed to appeal to SPH shareholders lacking patience for SPH to unlock value through capital recycling (such as a listing of PBSA assets, disposal of investments), a post-COVID-19 recovery particularly in its property businesses and improving earnings quality through diversifying into defensive assets. Overall, while the implied offer price is not a knockout bid, it is ok in the context of our SoTP valuation (post-media business restructuring). 

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> had been undergoing a strategic review - something long awaited, and perpetually not quite done. The outcome is going to disappoint some (thus my title).Today, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> made an <a href="https://links.sgx.com/FileOpen/Announcement.ashx?App=Announcement&amp;FileID=665172" target="_blank" rel="noopener">announcement</a> (<a href="https://links.sgx.com/FileOpen/Media%20Release.ashx?App=Announcement&amp;FileID=665173" target="_blank" rel="noopener">media release</a>, <a href="https://links.sgx.com/FileOpen/Analyst%20Briefing.ashx?App=Announcement&amp;FileID=665174" target="_blank" rel="noopener">analyst presentation</a>) that it would undergo a Proposed Restructuring (defined by a Business Restructuring Deed ("BRD")) which would spin off the Media Business into a Media Holdco which would be run as a not-for-profit in the form of a Company Limited by Guarantee (CLG), basically a charity in corporate form (subject to the Companies Act). The quick and dirty of the situation is that SPH is giving away 6.6% of its equity (and 12+% of its market cap) to the ether so that it is no longer carrying the media business around its neck like an albatross. The Media business has seen revenue declines in the traditional print space, and SPH Media ad revenue fell 39% from FY2018 to FY2020. Operating revenue in the past five years has halved, and in FY2020, the SPH Media business posted its first ever loss. H1 2021 has seen the run-rate worsen further. The idea is to give away the business, and assets to help it fund itself, to ring-fence SPH from SPH Media going forward, and to remove the strictures of the Newspaper and Printing Presses Act ("NPPA") which bind SPH today.One can think of it as an owner having to recapitalise a loss-making business before selling it for a dollar. Sometimes something is worth less than nothing. It is not a done deal. There are conditions to complete. But it is worthwhile looking at the before/after to determine the "value" of SPH going forward because while revenue will drop, operating profits should increase on a pro-forma basis, and dropping the NPPA restrictions has the potential to make things quite interesting in the medium-long-term.More below the fold.

Singapore Press Holdings (SPH SP) had been undergoing a strategic review - something long awaited, and perpetually not quite done. The outcome is going to disappoint some (thus my title).Today, Singapore Press Holdings (SPH SP) made an announcement (media release, analyst presentation) that it would undergo a Proposed Restructuring (defined by a Business Restructuring Deed ("BRD")) which would spin off the Media Business into a Media Holdco which would be run as a not-for-profit in the form of a Company Limited by Guarantee (CLG), basically a charity in corporate form (subject to the Companies Act). The quick and dirty of the situation is that SPH is giving away 6.6% of its equity (and 12+% of its market cap) to the ether so that it is no longer carrying the media business around its neck like an albatross. The Media business has seen revenue declines in the traditional print space, and SPH Media ad revenue fell 39% from FY2018 to FY2020. Operating revenue in the past five years has halved, and in FY2020, the SPH Media business posted its first ever loss. H1 2021 has seen the run-rate worsen further. The idea is to give away the business, and assets to help it fund itself, to ring-fence SPH from SPH Media going forward, and to remove the strictures of the Newspaper and Printing Presses Act ("NPPA") which bind SPH today.One can think of it as an owner having to recapitalise a loss-making business before selling it for a dollar. Sometimes something is worth less than nothing. It is not a done deal. There are conditions to complete. But it is worthwhile looking at the before/after to determine the "value" of SPH going forward because while revenue will drop, operating profits should increase on a pro-forma basis, and dropping the NPPA restrictions has the potential to make things quite interesting in the medium-long-term.More below the fold. 

Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You)

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 Bottom-Up

Manulife US REIT (MUST) / Equity Bottom-Up

In my previous insights on Singapore REITs I have spoken about a number of different sectors, however, I haven't spoken about the overseas focussed REITs, so far.
In this insight, I'll take a closer look at some of the Singapore listed EU/US focussed REITs.
Links to my previous REITs insights:
<ul>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-what-s-been-cooking-this-year" target="_blank" rel="noopener">Singapore REITs - What’s Been Cooking This Year,</a> I spoke about how the REITs have performed this year and touched upon some of the factors that have been driving them. </li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-sgreits-retail-reits-share-price-has-been-more-resilient-than-it-should-be" target="_blank" rel="noopener">Trade Ideas for SGREITs - Retail REITs Share Price Has Been More Resilient than It Should Be,</a> I spoke about the factors that have been impacting retail REITs. </li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-office-reits-this-time-it-s-different" target="_blank" rel="noopener">Trade Ideas SG Office REITs - This Time It’s Different</a> I spoke about how the office REITs might fare better.</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-industrial-reits-bigger-names-have-been-holding-up-a-little-too-well" target="_blank" rel="noopener">Trade Ideas SG Industrial REITs - Bigger Names Have Been Holding up a Little Too Well </a> I spoke about the industrial REITs</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-get-out-of-jail-free-card-for-the-tenants" target="_blank" rel="noopener">Singapore REITs - Get Out of Jail Free Card, for the Tenants</a> I spoke about how the recent changes announced by the government would benefit the smaller tenants more than the landlords.</li>
</ul>

In my previous insights on Singapore REITs I have spoken about a number of different sectors, however, I haven't spoken about the overseas focussed REITs, so far.
In this insight, I'll take a closer look at some of the Singapore listed EU/US focussed REITs.
Links to my previous REITs insights:


Singapore REITs - What’s Been Cooking This Year, I spoke about how the REITs have performed this year and touched upon some of the factors that have been driving them. 

Trade Ideas for SGREITs - Retail REITs Share Price Has Been More Resilient than It Should Be, I spoke about the factors that have been impacting retail REITs. 

Trade Ideas SG Office REITs - This Time It’s Different I spoke about how the office REITs might fare better.

Trade Ideas SG Industrial REITs - Bigger Names Have Been Holding up a Little Too Well  I spoke about the industrial REITs

Singapore REITs - Get Out of Jail Free Card, for the Tenants I spoke about how the recent changes announced by the government would benefit the smaller tenants more than the landlords.


Trade Ideas SG EU/US Focus REITs - The Orphaned Lot Is Starting to Look Interesting

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Prime US REIT (PRIME SP)

Keppel’s Final Offer for SPH - Game, Set and Match?

Keppel's final and improved offer is worth S$2.351 per share. It will be difficult for Cuscaden to launch a more compelling all-cash offer....

Arun George

SPH’s Rival Offer from Cuscaden

The modest premium of both competing offers to SPH’s historical long-term multiples and share prices suggests that there is room for Keppel to bump...

Arun George

SPH’s Privatisation by Keppel

SPH announced a privatisation offer from Keppel for a total consideration is S$2.099 per share. While the implied offer price is not a knockout...

Arun George

Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You)

SPH has announced a business restructuring to divest itself of its loss-making Media Holdings, paying to make it go away. This changes structure -...

Travis Lundy

Trade Ideas SG EU/US Focus REITs - The Orphaned Lot Is Starting to Look Interesting

In my previous insights on Singapore REITs I have spoken about a number of different sectors, however, I haven't spoken about the overseas focussed...

Sumeet Singh

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