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>
<a href="https://www.smartkarma.com/entities/prosus-nv-75c7a0c4-16ff-4433-a40f-25ae5b24077d" target="_blank" data-smartkarma-citation="entities:28498:1" rel="noopener">Prosus NV (PROSY US)</a> aims to raise around US$14.5bn via selling a 2% stake in <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>.
The deal comes nearly three years, and right after the lock-up expiry, from the previous placement when on 22nd March 2018, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> reluctantly sold US$10bn worth of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> shares.  We have covered the previous placement in our earlier note, <a href="https://www.smartkarma.com/insights/tencent-placement-huge-deal-in-size-small-in-relative-terms-succumbing-to-the-holdco-discount" target="_blank" rel="noopener">Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount</a>.
We have been covering the lock-up expiry since Feb 2021 in:
<ul>
<li><a href="https://www.smartkarma.com/insights/tencent-placement-lock-up-expiry-us-10bn-block-and-buyback-linked-holdco-trade" target="_blank" rel="noopener">Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade, and</a></li>
<li><a href="https://www.smartkarma.com/insights/tencent-placement-lock-up-expiry-block-and-buyback-linked-holdco-trade-update" target="_blank" rel="noopener">Tencent Placement Lock-Up Expiry -  Block and Buyback Linked Holdco Trade Update</a></li>
</ul>
In this note, we will talk about the deal dynamics.
</div>


Prosus NV (PROSY US) aims to raise around US$14.5bn via selling a 2% stake in Tencent Holdings (700 HK).
The deal comes nearly three years, and right after the lock-up expiry, from the previous placement when on 22nd March 2018, Naspers (NPN SJ) reluctantly sold US$10bn worth of Tencent Holdings (700 HK) shares.  We have covered the previous placement in our earlier note, Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount.
We have been covering the lock-up expiry since Feb 2021 in:

Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade, and
Tencent Placement Lock-Up Expiry -  Block and Buyback Linked Holdco Trade Update

In this note, we will talk about the deal dynamics.


Tencent Placement - Another Reluctant but Well-Flagged Sell Down, Lifting the US$14.5bn Overhang

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On Friday 30 October in the morning, <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a><a href="https://www.prosus.com/news/media-release-prosus-to-acquire-us%245-billion-of-na" target="_blank" rel="noopener">announced</a> that it would conduct a US$5bn buyback of Prosus shares and <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> shares (i.e. the subsidiary would buy shares in the parent to avoid passing down income from sub to parent which could be taxed). 
There were some pleasant, shareholder-friendly comments. 
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In total, Prosus will acquire up to US$5 billion in shares in Naspers and Prosus on the open market, starting after interim earnings are released on 23 November 2020. Purchases will be made on a pro-rata (72.5%/27.5%) basis in line with the economic stakes of both companies in the Prosus/Naspers asset base and Prosus would not vote shares purchased and they would come out of the per-share calculations for EPS and BVPS.
It isn't a lot in the grand scheme of things, but $5bn is $5bn, and the discount is quite wide, so this deserves a look.

On Friday 30 October in the morning, Prosus (PRX NA)announced that it would conduct a US$5bn buyback of Prosus shares and Naspers (NPN SJ) shares (i.e. the subsidiary would buy shares in the parent to avoid passing down income from sub to parent which could be taxed). 
There were some pleasant, shareholder-friendly comments. 



In total, Prosus will acquire up to US$5 billion in shares in Naspers and Prosus on the open market, starting after interim earnings are released on 23 November 2020. Purchases will be made on a pro-rata (72.5%/27.5%) basis in line with the economic stakes of both companies in the Prosus/Naspers asset base and Prosus would not vote shares purchased and they would come out of the per-share calculations for EPS and BVPS.
It isn't a lot in the grand scheme of things, but $5bn is $5bn, and the discount is quite wide, so this deserves a look.

Naspers & Prosus - A $5bn Catalyst Arrives

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

<ul>
<li>Ownership levels in JD.com have increased aggressively among active EM managers over the past 6-months.</li>
<li>Investor sentiment is among the most positive across the entire EM stock universe as previous owners buy back into the stock.</li>
<li>Of the funds who currently own the stock, holdings are significant and, in many cases the largest on record. There is real conviction among current holders in JD.com.</li>
<li>From an active fund perspective, despite aggregate weights hitting new highs this month, ownership has room to move another leg higher from here, however, current price levels do seem overstretched compared to the current levels of fund ownership.</li>
</ul>


Ownership levels in JD.com have increased aggressively among active EM managers over the past 6-months.
Investor sentiment is among the most positive across the entire EM stock universe as previous owners buy back into the stock.
Of the funds who currently own the stock, holdings are significant and, in many cases the largest on record. There is real conviction among current holders in JD.com.
From an active fund perspective, despite aggregate weights hitting new highs this month, ownership has room to move another leg higher from here, however, current price levels do seem overstretched compared to the current levels of fund ownership.


JD.Com.  Exposure Hits New Highs, but EM Allocations Not Fully Deployed.

The Naspers spinoff of Prosus this past summer was much talked about on Smartkarma.
We got some things right and some things wrong. We got the general direction of some of the spreads right, though they did not move as much as expected. 
We got the index impact timing from selling of Prosus wrong, but that was in timing, not necessarily in quantum. Data subsequent to the index event shows the main expected seller sold little at the time but has been almost 30% of volume since (selling). 
The spread-widening from the actual spinoff can be broken down into component spreads, and doing so is highly instructive. The Just Eat bid was clearly important in spread dynamics. The post-spinoff large seller was probably also an important factor. 
There are some ongoing pressures which could widen Prosus/Basket, despite the fact that it is near post-spinoff wides. Furthermore, the Naspers selldown of Prosus shares last week which could enable a buyback on Naspers shares from its near-wides of 42% discount to look-through basket may have a good reason. There are long-term selling pressures on Naspers as well. 
We explore the movement, timing, and spread de-composition below.

The Naspers spinoff of Prosus this past summer was much talked about on Smartkarma.
We got some things right and some things wrong. We got the general direction of some of the spreads right, though they did not move as much as expected. 
We got the index impact timing from selling of Prosus wrong, but that was in timing, not necessarily in quantum. Data subsequent to the index event shows the main expected seller sold little at the time but has been almost 30% of volume since (selling). 
The spread-widening from the actual spinoff can be broken down into component spreads, and doing so is highly instructive. The Just Eat bid was clearly important in spread dynamics. The post-spinoff large seller was probably also an important factor. 
There are some ongoing pressures which could widen Prosus/Basket, despite the fact that it is near post-spinoff wides. Furthermore, the Naspers selldown of Prosus shares last week which could enable a buyback on Naspers shares from its near-wides of 42% discount to look-through basket may have a good reason. There are long-term selling pressures on Naspers as well. 
We explore the movement, timing, and spread de-composition below.

Naspers & Prosus Vs Basket Spinoff Plus Four Months - Where Do We Stand?

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 (PROSY US)

Tencent Placement - Another Reluctant but Well-Flagged Sell Down, Lifting the US$14.5bn Overhang

Prosus aims to raise around US$14.5bn via selling a 2% stake in Tencent. The deal comes nearly three years, and right after the lock-up expiry,...

Sumeet Singh

Naspers & Prosus - A $5bn Catalyst Arrives

Naspers/Prosus finally has a catalyst. It's not a HUGE catalyst but US$5bn is US$5bn. The trick is to think about where this places you at the end...

Travis Lundy

JD.Com. Exposure Hits New Highs, but EM Allocations Not Fully Deployed.

Ownership levels in JD.com have increased aggressively among active EM managers over the past 6-months. Investor sentiment is among the most...

Steven Holden

Naspers & Prosus Vs Basket Spinoff Plus Four Months - Where Do We Stand?

The Naspers spinoff of Prosus this past summer was much talked about on Smartkarma. We got some things right and some things wrong. We got the...

Travis Lundy

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