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

Langham Hospitality Inv Ss / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/langham-hospitality-inv-ss" target="_blank" data-smartkarma-citation="entities:760:1" rel="noopener">Langham Hospitality Inv Ss (1270 HK)</a> received a notice from <a href="https://www.smartkarma.com/entities/great-eagle-holdings-ltd" target="_blank" data-smartkarma-citation="entities:758:1" rel="noopener">Great Eagle Holdings (41 HK)</a>, the largest unitholder, that it intends to present a detailed proposal for scheme privatisation.</li>
<li>The privatisation interest is unsurprising, as the unit price has declined by 43% over the last twelve months. A tough 2023 did not help the declining sentiment.</li>
<li>Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47% premium to the last close.</li>
</ul>



Langham Hospitality Inv Ss (1270 HK) received a notice from Great Eagle Holdings (41 HK), the largest unitholder, that it intends to present a detailed proposal for scheme privatisation.
The privatisation interest is unsurprising, as the unit price has declined by 43% over the last twelve months. A tough 2023 did not help the declining sentiment.
Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47% premium to the last close.


Langham Hospitality Investments (1270 HK): Great Eagle (41 HK)’s Possible Scheme Privatisation

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> has <a href="https://links.sgx.com/FileOpen/202108_01%20Major%20and%20Connected%20Transaction%20in%20Relation%20to%20the%20Proposed%20Acquisition%20of%20ARA%20Asset%20Managament%20Limited.ashx?App=Announcement&amp;FileID=677405" target="_blank" rel="noopener">announced</a> it is acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn.
Under the terms of the US$5,192mn transaction, ESR will issue US$4.7bn via new ESR shares (US$4.286mn) and vendor loan notes (US$387mn); and US$519mn in cash, to be funded by a US$250mn placement to SMBC, and the remainder (US$269mn) in debt. The scrip/cash split is 90/10.
All of the ARA shareholders are rolling over their shares  - and will mostly be subject to a six-month lock-up - and will hold ~28% of the enlarged entity at completion.
The transaction requires the approval from ESR shareholders by way of an ordinary resolution. Irrevocables totaling 4.6%, to vote in favour of the deal, have been received from ESR's founders, together with OMERS and <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>.
There are various pre-conditions attached to the deal, with an EGM expected to be convened before 31 October. The deal may be wrapped up late 4Q21, early 1Q22.
Much more below the fold. 
</div>


ESR Cayman (1821 HK) has announced it is acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn.
Under the terms of the US$5,192mn transaction, ESR will issue US$4.7bn via new ESR shares (US$4.286mn) and vendor loan notes (US$387mn); and US$519mn in cash, to be funded by a US$250mn placement to SMBC, and the remainder (US$269mn) in debt. The scrip/cash split is 90/10.
All of the ARA shareholders are rolling over their shares  - and will mostly be subject to a six-month lock-up - and will hold ~28% of the enlarged entity at completion.
The transaction requires the approval from ESR shareholders by way of an ordinary resolution. Irrevocables totaling 4.6%, to vote in favour of the deal, have been received from ESR's founders, together with OMERS and JD.com Inc. (9618 HK).
There are various pre-conditions attached to the deal, with an EGM expected to be convened before 31 October. The deal may be wrapped up late 4Q21, early 1Q22.
Much more below the fold. 


ESR Cayman (1821 HK) Takes Out ARA Asset Management

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

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.We have looked at the background of the deal in our previous note,<a href="https://www.smartkarma.com/insights/sf-reit-pre-ipo-one-trick-pony-who-s-not-doing-the-trick" target="_blank" rel="noopener"> SF REIT Pre-IPO -One trick pony, who’s not doing the trick</a>.In this note, we’ll run the deal through our ECM framework and talk about valuations.

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.We have looked at the background of the deal in our previous note, SF REIT Pre-IPO -One trick pony, who’s not doing the trick.In this note, we’ll run the deal through our ECM framework and talk about valuations.

SF REIT IPO - Don’t See a Clear Reason to Buy

<a href="https://www.smartkarma.com/entities/sf-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:31496:1" rel="noopener">SF Real Estate Investment Trust (SF HK)</a> is a REIT formed with an initial focus on income-generating logistics properties in Hong Kong and China. The sponsor is <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>. SF REIT will be the first logistics-focused REIT to be listed in Hong Kong.SF REIT has launched its IPO with an indicative price range of HK$4.68-5.16 per unit. The total proceeds will be HK$2,433.6-2,683.2 million ($313-345 million) at the price range. Two cornerstone investors will subscribe for $50.0 million of the offer units (15.2% of the offer units at the mid-point of the price range). The cornerstone investors are China Orient International Asset Management and <a href="https://www.smartkarma.com/entities/ci-financial-corp" target="_blank" data-smartkarma-citation="entities:25448:1" rel="noopener">Ci Financial (CIX CN)</a>. <div class="content-highlight">In <a href="https://www.smartkarma.com/insights/sf-reit-ipo-initiation-the-reit-flow-of-things" target="_blank" data-smartkarma-citation="insights:50673" rel="noopener">SF REIT IPO Initiation: The REIT Flow of Things</a>,  we noted that SF REIT offers an attractive proposition for investors willing to invest in a niche segment of the Asian REIT sector. However, our valuation analysis suggests that units are fully priced at the minimum offer price. Consequently, we are inclined to give this IPO a pass and wait for a lower entry point. </div>

SF Real Estate Investment Trust (SF HK) is a REIT formed with an initial focus on income-generating logistics properties in Hong Kong and China. The sponsor is S.F. Holding (002352 CH). SF REIT will be the first logistics-focused REIT to be listed in Hong Kong.SF REIT has launched its IPO with an indicative price range of HK$4.68-5.16 per unit. The total proceeds will be HK$2,433.6-2,683.2 million ($313-345 million) at the price range. Two cornerstone investors will subscribe for $50.0 million of the offer units (15.2% of the offer units at the mid-point of the price range). The cornerstone investors are China Orient International Asset Management and Ci Financial (CIX CN). In SF REIT IPO Initiation: The REIT Flow of Things,  we noted that SF REIT offers an attractive proposition for investors willing to invest in a niche segment of the Asian REIT sector. However, our valuation analysis suggests that units are fully priced at the minimum offer price. Consequently, we are inclined to give this IPO a pass and wait for a lower entry point. 

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the Hang Seng Composite Index (HSCI) there are 36 inclusions and 29 deletions, taking the number of index constituents up to 500.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. Secondary Listings are not eligible for inclusion in the Stock Connect program.Of the 36 inclusions, 4 are already a part of Stock Connect by virtue of having listed A-shares, 2 are Secondary listings and will not be included in Stock Connect, 9 will be added to Shanghai and Shenzhen Stock Connect, while 21 stocks will only be added to Shenzhen Stock Connect.Of the 29 index deletions, 13 are not a part of Stock Connect, 7 will continue to remain a part of Stock Connect by virtue of having listed A-shares, while 9 will be deleted from the Stock Connect program.We identify 4 stocks that could sell off ahead of their removal from the Stock Connect Buy list, while Biotech stocks could be in focus ahead of their inclusion in the Stock Connect Buy and Sell list.

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the Hang Seng Composite Index (HSCI) there are 36 inclusions and 29 deletions, taking the number of index constituents up to 500.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. Secondary Listings are not eligible for inclusion in the Stock Connect program.Of the 36 inclusions, 4 are already a part of Stock Connect by virtue of having listed A-shares, 2 are Secondary listings and will not be included in Stock Connect, 9 will be added to Shanghai and Shenzhen Stock Connect, while 21 stocks will only be added to Shenzhen Stock Connect.Of the 29 index deletions, 13 are not a part of Stock Connect, 7 will continue to remain a part of Stock Connect by virtue of having listed A-shares, while 9 will be deleted from the Stock Connect program.We identify 4 stocks that could sell off ahead of their removal from the Stock Connect Buy list, while Biotech stocks could be in focus ahead of their inclusion in the Stock Connect Buy and Sell list.

HSCI Index Rebalance & Stock Connect: Inclusions & Exclusions

Hong Kong

Prosperity REIT is a real estate investment trust formed primarily to own and invest in commercial properties, with exposure to the office and industrial office sectors in Hong Kong.

Prosperity Reit (808 HK)

Langham Hospitality Investments (1270 HK): Great Eagle (41 HK)’s Possible Scheme Privatisation

Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47%...

Arun George

ESR Cayman (1821 HK) Takes Out ARA Asset Management

This looks like a great deal for ESR. But the company looks full here compared to historical metrics. Plus there is an indication of further...

David Blennerhassett

SF REIT IPO - Don’t See a Clear Reason to Buy

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF...

Sumeet Singh

SF REIT IPO: Valuation Insights

SF REIT has launched its IPO to raise $313-345 million at the price range. Our valuation analysis suggests that units are fully priced at the...

Arun George

HSCI Index Rebalance & Stock Connect: Inclusions & Exclusions

There are 36 inclusions/ 29 exclusions for the Hang Seng Composite Index. 9 stocks will be deleted from the Stock Connect Buy list & there are a...

Brian Freitas