Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

Melco International Development / Equity Bottom-Up

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<p>This week in StubWorld  ...</p>
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<p>With the clock ticking and less than one year until the Macau gaming concession renewal, a simple extension appears the logical course of action. Yet a Macanese government consultation paper believes the VIP room model is untenable under the SAR's national security law.</p>
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<p>Preceding my comments on Wynn are the updated setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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<p>As always, more below the fold.</p>
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This week in StubWorld  ...




With the clock ticking and less than one year until the Macau gaming concession renewal, a simple extension appears the logical course of action. Yet a Macanese government consultation paper believes the VIP room model is untenable under the SAR's national security law.




Preceding my comments on Wynn are the updated setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


As always, more below the fold.


StubWorld: Gambling On Macau's Gaming Concession Renewal

Travis Lundy

Event-Driven

<p>The <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> Exchange Offer to buy 45.33% of <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> closed Friday at noon Johannesburg time and just 2 hours later, we had the result (would that other offers around the world would be so quick to announce. </p>
<p>It has been a nerve-wracking couple of days for arbitrageurs, perhaps upset that the spread trading ex-event has had the sheer audacity to trade as wide as was implied in the days before it went ex- by the minimum pro-ration and the borrow market. At 5% before and prevailing borrow rates at the time, shorting and getting done on 47.6% of the borrow meant the breakeven between buying at 5% beforehand and buying to cover ex- was at 9.5% to terms.</p>
<p>The event is now done, and this morning pre-open there is <a href="https://www.prosus.com/news/the-implementation-of-the-capital-restructure-and-the-results-of-the-exchange-offer/" target="_blank" rel="noopener">more detail</a> with pro-ration coming in at 64% for those who participated on an uncapped basis. </p>
<p>I had the wider range at 54-64% as discussed in my last few insights (but that range was pretty much that from the start) with a narrower range tilted towards the lower end.</p>
<p>The fact that it came in at 64% <em>overall</em> (the numbers are a bit weird) tells us something. <em>It tells us quite a bit in fact. </em><br><br>Helpfully, many of the major index providers also announced on Friday night which means there is potentially a LOT of paper to move on Tuesday afternoon. </p>
<p>Today, the first day of trading of the new shares, both Naspers and Prosus are trading much more liquidly AND surprisingly, the spread is reasonably stable, caught just now at 666bp to terms.</p>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/223/947/original/Screenshot+2021-08-16+at+6.00.51+PM.png?1629108107" class="editor-image img-responsive" data-smartkarma-image-id="223947"></figure>
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<p>This is trading narrower than I would have expected by a couple of percent which suggests to me that index investors participated, and some arbs simply borrowed and shorted Naspers to get the result here, going from no economics to a long Prosus short Naspers position, and long-only active investors may be unwinding into that cover demand. </p>
<p>But because this involves a lot of data and details, there is <em>a lot</em> more below the fold.</p>

The Prosus (PRX NA) Exchange Offer to buy 45.33% of Naspers (NPN SJ) closed Friday at noon Johannesburg time and just 2 hours later, we had the result (would that other offers around the world would be so quick to announce. 
It has been a nerve-wracking couple of days for arbitrageurs, perhaps upset that the spread trading ex-event has had the sheer audacity to trade as wide as was implied in the days before it went ex- by the minimum pro-ration and the borrow market. At 5% before and prevailing borrow rates at the time, shorting and getting done on 47.6% of the borrow meant the breakeven between buying at 5% beforehand and buying to cover ex- was at 9.5% to terms.
The event is now done, and this morning pre-open there is more detail with pro-ration coming in at 64% for those who participated on an uncapped basis. 
I had the wider range at 54-64% as discussed in my last few insights (but that range was pretty much that from the start) with a narrower range tilted towards the lower end.
The fact that it came in at 64% overall (the numbers are a bit weird) tells us something. It tells us quite a bit in fact.   Helpfully, many of the major index providers also announced on Friday night which means there is potentially a LOT of paper to move on Tuesday afternoon. 
Today, the first day of trading of the new shares, both Naspers and Prosus are trading much more liquidly AND surprisingly, the spread is reasonably stable, caught just now at 666bp to terms.



This is trading narrower than I would have expected by a couple of percent which suggests to me that index investors participated, and some arbs simply borrowed and shorted Naspers to get the result here, going from no economics to a long Prosus short Naspers position, and long-only active investors may be unwinding into that cover demand. 
But because this involves a lot of data and details, there is a lot more below the fold.

Naspers Deal Done - Flex Participation and Pro-Ration, Misunderstandings, and INDEX CHANGES GALORE!

<p>Today is the last day of trading for the Naspers Exchange Offer before it goes ex- tomorrow. A number of investors and traders will find it impossible to buy and offer their shares through normal settlement mechanisms and could only do so on swap as normal corporate action windows would have closed.</p><p>That said, after a brief hiccup this morning, the spread is trading quite stably where it was yesterday at 4.8-5.3%. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/223/127/original/Screenshot+2021-08-10+at+7.16.18+PM.png?1628594193" class="editor-image img-responsive" data-smartkarma-image-id="223127"></figure><p></p></section><p>Going forward, the process of spread change, and flow impacts will hop around a bit, and this is a brief guide to that timing and expected influence.</p>

Today is the last day of trading for the Naspers Exchange Offer before it goes ex- tomorrow. A number of investors and traders will find it impossible to buy and offer their shares through normal settlement mechanisms and could only do so on swap as normal corporate action windows would have closed.That said, after a brief hiccup this morning, the spread is trading quite stably where it was yesterday at 4.8-5.3%. Going forward, the process of spread change, and flow impacts will hop around a bit, and this is a brief guide to that timing and expected influence.

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><p><a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a> raised US$1.3bn in its India IPO, making it the the largest listing in India from the technology sector.</p></div><div>We have covered various aspects of the deal in our earlier notes  </div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/zomato-pre-ipo-filings-lack-narrative-a-little-bit-of-history-helps" target="_blank" rel="noopener">Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps, </a></li>
<li><a href="https://www.smartkarma.com/insights/zomato-pre-ipo-food-delivery-revenue-was-probably-up-16x" target="_blank" rel="noopener">Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x, and</a></li>
<li><a href="https://www.smartkarma.com/insights/zomato-pre-ipo-peer-comparison-listed-and-domestic" target="_blank" rel="noopener">Zomato Pre-IPO - Peer Comparison - Listed and Domestic</a></li>
<li><a href="https://www.smartkarma.com/insights/zomato-ipo-strong-4q21-has-a-very-long-runway" target="_blank" rel="noopener">Zomato IPO - Strong 4Q21, Has a Very Long Runway</a></li>
</ul></div><div><p>In this note, we will talk about the updates and the trading dynamics.</p></div>

Zomato (ZOM IN) raised US$1.3bn in its India IPO, making it the the largest listing in India from the technology sector.We have covered various aspects of the deal in our earlier notes  
Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps, 
Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x, and
Zomato Pre-IPO - Peer Comparison - Listed and Domestic
Zomato IPO - Strong 4Q21, Has a Very Long Runway
In this note, we will talk about the updates and the trading dynamics.

Zomato IPO Trading - Ample Demand for Unique Exposure

<p>On Friday, the <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> EGM to consider and approve the transaction and cross-shareholding which comes from Prosus launching a Proposed Voluntary Exchange Offer to shareholders of <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> was held. </p><p>The results look like the table below (Prosus announcement <a href="https://www.share-exchange-offer.com/wp-content/uploads/2021/07/prosus-announcement.pdf" target="_blank" rel="noopener">link</a>). If we assume that the A Share holders voted for the deal, and Naspers voted for the deal, that left 316mm other votes out of the 432.5mm shares eligible to vote which is a 73% turnout. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/217/902/original/Screenshot+2021-07-12+at+1.52.50+PM.png?1626069193" class="editor-image img-responsive" data-smartkarma-image-id="217902"></figure><p></p></section><p>While this deal was never going to not get passed in the EGM, because Naspers management and Prosus management control are the same, if it had been an overwhelming loss in terms of minority shareholder support, they might have thought about reconsidering their support for the project. </p><p>It was not an overwhelming defeat, but it was not overwhelming support either. It is 52.83% of minorities FOR, 46.51% AGAINST. Based on this nominally being a majority of the minority, one should expect this to go ahead. </p><p>That meant that the Prospectus would be announced today. And it has been (<a href="https://www.share-exchange-offer.com/wp-content/uploads/2021/07/prosus-prospectus.pdf" target="_blank" rel="noopener">link</a>). And the Exchange Offer ends on 13 August 2021. The new shares of Prosus will start trading on the 16th of August on the JSE, A2X, and Euronext Amsterdam. </p>

On Friday, the Prosus (PRX NA) EGM to consider and approve the transaction and cross-shareholding which comes from Prosus launching a Proposed Voluntary Exchange Offer to shareholders of Naspers (NPN SJ) was held. The results look like the table below (Prosus announcement link). If we assume that the A Share holders voted for the deal, and Naspers voted for the deal, that left 316mm other votes out of the 432.5mm shares eligible to vote which is a 73% turnout. While this deal was never going to not get passed in the EGM, because Naspers management and Prosus management control are the same, if it had been an overwhelming loss in terms of minority shareholder support, they might have thought about reconsidering their support for the project. It was not an overwhelming defeat, but it was not overwhelming support either. It is 52.83% of minorities FOR, 46.51% AGAINST. Based on this nominally being a majority of the minority, one should expect this to go ahead. That meant that the Prospectus would be announced today. And it has been (link). And the Exchange Offer ends on 13 August 2021. The new shares of Prosus will start trading on the 16th of August on the JSE, A2X, and Euronext Amsterdam. 

Prosus EGM Approves Partial Offer for Naspers - Next Steps Interesting, Part I

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 NA)

StubWorld: Gambling On Macau's Gaming Concession Renewal

The clock is ticking with less than one year until the Macau gaming concession renewal, a simple extension appears the logical course of action.

David Blennerhassett

Naspers Deal Done - Flex Participation and Pro-Ration, Misunderstandings, and INDEX CHANGES GALORE!

The Naspers deal is done, pro-ration is out. For those who went uncapped, it was 64%. This indicates a basic minimum of ~80% participation. Index...

Travis Lundy

Naspers/Prosus - Now We Go Ex-Offer

Naspers goes ex-Offer on Wednesday 11 August. The Offer closes 13 August. We could see a price dip on NPN between, which could encourage pro-ration...

Travis Lundy

Zomato IPO Trading - Ample Demand for Unique Exposure

Zomato (ZOM IN) raised US$1.3bn in its India IPO, making it the the largest listing in India from the technology sector.

Sumeet Singh

Prosus EGM Approves Partial Offer for Naspers - Next Steps Interesting, Part I

Prosus approved the Naspers tender despite proxy opposition. Now it is Naspers' holders' turn to make their bets. Details in the prospectus promise...

Travis Lundy

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