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.

Event-Driven

<ul>
<li>Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.</li>
<li>Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.</li>
<li>In this note, we talk about the implication and timing of today’s announcements.</li>
</ul>


Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.
Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.
In this note, we talk about the implication and timing of today’s announcements.


Prosus, Tencent, JD.com - Good Intentions but Questionable Timing

<ul>
<li>On 23rd Dec 2021, Tencent declared a special dividend in the form of distribution in specie of shares of JD.com, making Prosus the third largest shareholder with a 4.2% stake.</li>
<li>The actual settlement only happened on 25th Mar. On that day, the bulk of the stock that Tencent distributed moved into CCASS with the exception of shares held by Prosus.</li>
<li>In this note, we talk about the shareholding pattern and increase in shares held in CCASS.</li>
</ul>


On 23rd Dec 2021, Tencent declared a special dividend in the form of distribution in specie of shares of JD.com, making Prosus the third largest shareholder with a 4.2% stake.
The actual settlement only happened on 25th Mar. On that day, the bulk of the stock that Tencent distributed moved into CCASS with the exception of shares held by Prosus.
In this note, we talk about the shareholding pattern and increase in shares held in CCASS.


JD.com Tencent Distribution - All Prosus Stock Worth US$3.5bn Could Be in CCASS Now

Equity Capital Markets

<ul>
<li>On 23rd Dec, Tencent declared a dividend in the form of distribution in specie of 457.326m shares of JD.com, i.e. 1 share of JD.com for every 21 shares of Tencent.</li>
<li>While Tencent went ex-div on 20th Jan 2022, the actual settlement of the distribution is expected to happen on or about 25th Mar 2022.</li>
<li>In this note, we look at Tencent’s shareholding in order to decipher the impact on JD.com’s shares once the distribution is settled to determine who the sellers could be.</li>
</ul>


On 23rd Dec, Tencent declared a dividend in the form of distribution in specie of 457.326m shares of JD.com, i.e. 1 share of JD.com for every 21 shares of Tencent.
While Tencent went ex-div on 20th Jan 2022, the actual settlement of the distribution is expected to happen on or about 25th Mar 2022.
In this note, we look at Tencent’s shareholding in order to decipher the impact on JD.com’s shares once the distribution is settled to determine who the sellers could be.


JD.com Tencent Div Distribution - The US$10bn Overhang

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

Cross Asset Strategy

<ul>
<li>South African allocations have fallen to record lows among active GEM investors.  Over the last 6-months, weights have fallen by 0.77% to just 2.82% after fund outflows of $2.78bn.</li>
<li>Naspers was the driver following the Prosus exchange offer.  28 of the 126 pre-existing holders of Naspers sold down their positions , totalling $2.45bn in combined outflows</li>
<li>Strip out Naspers and South Africa looks to be bottoming out.  Selected stocks are starting to attract interest from active EM managers, led by FirstRand, MTN and Capitec.</li>
</ul>


South African allocations have fallen to record lows among active GEM investors.  Over the last 6-months, weights have fallen by 0.77% to just 2.82% after fund outflows of $2.78bn.
Naspers was the driver following the Prosus exchange offer.  28 of the 126 pre-existing holders of Naspers sold down their positions , totalling $2.45bn in combined outflows
Strip out Naspers and South Africa looks to be bottoming out.  Selected stocks are starting to attract interest from active EM managers, led by FirstRand, MTN and Capitec.


Naspers Drives South Africa Positioning to All-Time Lows, but Bright Spots Emerge

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>This summer saw the <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> Offer for <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> complete in early August, with Prosus now owning just under 50% of Naspers and Naspers owning ~38% of Prosus in what <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> called the new <a href="https://www.smartkarma.com/insights/naspers-prosus-south-african-keswicks" target="_blank" data-smartkarma-citation="insights:51401" rel="noopener"><em>South African "Keswicks"</em></a> (a reference to the circular relationship of the Jardines complex, recently unwound, where for years/decades it just went on as the Keswick family thought was in their own interests.</p>
<p>Pre-Offer results, I reco'd going long the Naspers-Prosus spread where it was trading ex-Offer at 670bp or so in <a href="https://www.smartkarma.com/insights/naspers-deal-done-flex-participation-and-pro-ration-misunderstandings-and-index-changes-galore" target="_blank" data-smartkarma-citation="insights:56011" rel="noopener">Naspers Deal Done - Flex Participation and Pro-Ration, Misunderstandings, and INDEX CHANGES GALORE!</a> </p>
<p>Just after the offer results were out and the initial index changes were made, the spread between Naspers and Prosus widened significantly to near (and briefly above) 20% against Offer Terms. I recommended unwinding the spread-widening trade and putting on a spread-narrowing trade in <a href="https://www.smartkarma.com/insights/naspers-prosus-initial-index-changes-done-now-to-reverse-the-trade" target="_blank" data-smartkarma-citation="insights:56256" rel="noopener">Naspers/Prosus Initial Index Changes Done, Now To Reverse the Trade</a>.</p>
<section class="figure">
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/375/original/Screenshot+2021-09-28+at+6.27.38+PM.png?1632826281" class="editor-image img-responsive" data-smartkarma-image-id="232375"></figure>
<p></p>
</section>
</section>
<p><em>So what next? </em></p>

This summer saw the Prosus (PRX NA) Offer for Naspers (NPN SJ) complete in early August, with Prosus now owning just under 50% of Naspers and Naspers owning ~38% of Prosus in what David Blennerhassett called the new South African "Keswicks" (a reference to the circular relationship of the Jardines complex, recently unwound, where for years/decades it just went on as the Keswick family thought was in their own interests.
Pre-Offer results, I reco'd going long the Naspers-Prosus spread where it was trading ex-Offer at 670bp or so in Naspers Deal Done - Flex Participation and Pro-Ration, Misunderstandings, and INDEX CHANGES GALORE! 
Just after the offer results were out and the initial index changes were made, the spread between Naspers and Prosus widened significantly to near (and briefly above) 20% against Offer Terms. I recommended unwinding the spread-widening trade and putting on a spread-narrowing trade in Naspers/Prosus Initial Index Changes Done, Now To Reverse the Trade.






So what next? 

China

Prosus N.V. provides internet based services. The Company focuses on investments in internet, digital media, e-commerce retailing, and consumer internet companies. Prosus serves customers worldwide.

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Prosus NV (PRX SJ)

Prosus, Tencent, JD.com - Good Intentions but Questionable Timing

Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market...

Sumeet Singh

JD.com Tencent Distribution - All Prosus Stock Worth US$3.5bn Could Be in CCASS Now

In Dec 21, Tencent declared a special dividend via distribution in specie of JD.com shares, making Prosus the 3rd largest shareholder. Some shares...

Sumeet Singh

JD.com Tencent Div Distribution - The US$10bn Overhang

On 23rd Dec 21, Tencent declared a dividend in the form of distribution in specie of 1 share of JD.com for every 21 shares of Tencent. The shares...

Sumeet Singh

Naspers Drives South Africa Positioning to All-Time Lows, but Bright Spots Emerge

Heavy selling in Naspers has driven South Africa exposure to record lows following the Prosus exchange offer. EM active managers turn instead to...

Steven Holden

Naspers/Prosus Spread - What Next?

The Naspers/Prosus reorg/Offer/Crossholding Structure was completed in early August. Index changes in mid-August, buyback program on Prosus started...

Travis Lundy

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