Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>When the Starwood/Warburg Pincus Consortium announced a firm offer on the 4th December, it was pre-conditional on a raft of regulatory approvals from no less than eight countries/jurisdictions. </li>
<li>We're half way there, with four approvals now squared away, leaving Australia, China, Hong Kong and New Zealand still to give the go ahead. </li>
<li>Irrevocables comprising 34.26% of the register (and 57.01% of disinterested shares) are now in the bag. This is a done deal. It's just a question of timing.</li>
</ul>


When the Starwood/Warburg Pincus Consortium announced a firm offer on the 4th December, it was pre-conditional on a raft of regulatory approvals from no less than eight countries/jurisdictions. 
We're half way there, with four approvals now squared away, leaving Australia, China, Hong Kong and New Zealand still to give the go ahead. 
Irrevocables comprising 34.26% of the register (and 57.01% of disinterested shares) are now in the bag. This is a done deal. It's just a question of timing.


<ul>
<li>
HK$13.00/Share (deemed final). That's the key takeaway here as the Starwood/Warburg Pincus Consortium (finally) tables a firm offer, by way of a pre-conditional Scheme.</li>
<li>Pre-Conditions are extensive, with a long stop date of the 4th September 2025.</li>
<li>HK$13.00 is below prior expectations of a HK$14+ handle. But with irrevocables of 30.79% of the register (and 51.24% of Scheme shares), this is done. A scrip option is afforded.</li>
</ul>



HK$13.00/Share (deemed final). That's the key takeaway here as the Starwood/Warburg Pincus Consortium (finally) tables a firm offer, by way of a pre-conditional Scheme.
Pre-Conditions are extensive, with a long stop date of the 4th September 2025.
HK$13.00 is below prior expectations of a HK$14+ handle. But with irrevocables of 30.79% of the register (and 51.24% of Scheme shares), this is done. A scrip option is afforded.


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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/esr-group-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Group (1821 HK)</a>’s preconditional scheme offer from the consortium is either cash (HK$13.00), scrip or a combination of cash/scrip. The offer is final.</li>
<li>The precondition relates to several regulatory approvals. The precondition satisfaction does not carry the same risk as the <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> deal break.   </li>
<li>The irrevocable (31.03% of outstanding shares) ensure that shareholders with blocking or close to blocking stakes are supportive. This is a done deal, with timing the key risk. </li>
</ul>



ESR Group (1821 HK)’s preconditional scheme offer from the consortium is either cash (HK$13.00), scrip or a combination of cash/scrip. The offer is final.
The precondition relates to several regulatory approvals. The precondition satisfaction does not carry the same risk as the China Traditional Chinese Medicine (570 HK) deal break.   
The irrevocable (31.03% of outstanding shares) ensure that shareholders with blocking or close to blocking stakes are supportive. This is a done deal, with timing the key risk. 


ESR Group (1821 HK): Consortium’s Scheme Cash/Scrip Privatisation Offer

Keisei Electric Railway Co / Event-Driven

<ul>
<li>The CSRC has announced five capital market cooperation measures for the Hong Kong Southbound Connect programs including  RMB dual counters and REITs. </li>
<li>
<a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a>'s current implied stub value and simple ratio are both highly elevated.</li>
<li>A simple <a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric Railway Co (9009 JP)</a>model says "this doesn't present me with enough upside to warrant it unless I am also really bullish <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>."</li>
</ul>


The CSRC has announced five capital market cooperation measures for the Hong Kong Southbound Connect programs including  RMB dual counters and REITs. 

Jardine Cycle &amp; Carriage (JCNC SP)'s current implied stub value and simple ratio are both highly elevated.
A simple Keisei Electric Railway Co (9009 JP)model says "this doesn't present me with enough upside to warrant it unless I am also really bullish Oriental Land (4661 JP)."


Last Week in Event SPACE: HK Southbound, Jardine Cycle, Keisei/Oriental Land, BHP/Anglo American

<div>
Back on the 17 May, after ARA Asset Management <a href="https://ara.listedcompany.com/newsroom/ARAPress_Release_SMBC0Joins-ARAasStrategicShareholder_17052021.pdf" target="_blank" rel="noopener">announced</a> a $500mn round of equity financing from Sumitomo Mitsui Banking Corporation, I reiterated a BUY on <a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> in <a href="https://skr.ma/TcDY5" target="_blank" rel="noopener">Straits Trading: ARA's Pre-IPO Funding From SMBC</a>.
Based on the <a href="https://ara.listedcompany.com/misc/circulars/ARA-Scheme_Document_FINAL.pdf" target="_blank" rel="noopener">Scheme</a> value of ARA in 2017 when it was taken private, and its then-AUM, ARA was potentially worth upwards of S$6bn. This in turn assigned a value of S$1.3bn for STR's stake in ARA, ~30% above its then-current market cap.
That was pretty close to the mark.
As discussed in <a href="https://skr.ma/fJECF" target="_blank" rel="noopener">ESR Cayman (1821 HK) Takes Out ARA Asset Management</a>, <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 now all but sealed the takeover of ARA in a US$5.2bn deal.
For its part, STR will pocket US$845.3mn (S$1.14bn) - in cash &amp; ESR scrip - from the transaction.
STR's shares have gained 13% as I type. 
More below the fold. 
</div>


Back on the 17 May, after ARA Asset Management announced a $500mn round of equity financing from Sumitomo Mitsui Banking Corporation, I reiterated a BUY on Straits Trading (STRTR SP) in Straits Trading: ARA's Pre-IPO Funding From SMBC.
Based on the Scheme value of ARA in 2017 when it was taken private, and its then-AUM, ARA was potentially worth upwards of S$6bn. This in turn assigned a value of S$1.3bn for STR's stake in ARA, ~30% above its then-current market cap.
That was pretty close to the mark.
As discussed in ESR Cayman (1821 HK) Takes Out ARA Asset Management, ESR Cayman (1821 HK) has now all but sealed the takeover of ARA in a US$5.2bn deal.
For its part, STR will pocket US$845.3mn (S$1.14bn) - in cash &amp; ESR scrip - from the transaction.
STR's shares have gained 13% as I type. 
More below the fold. 


Straits Trading Cheap As ARA Asset Exposure Monetized

Singapore

The Straits Trading Company Limited is a Singapore-based conglomerate-investment company with operations and financial interests in resources, property, and hospitality. Its activities include tin smelting, property investment, development, and management, as well as hotel ownership and management. The company was founded in Singapore in 1887.

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Straits Trading (STRTR SP)

ESR (1821 HK) Chips Away At Pre-Cons

Four of the eight key pre-conditions are now in the bag. And irrevocable undertakings have also been bolstered. This is a done deal. It’s just a...

David Blennerhassett

ESR Group (1821 HK): Consortium’s Scheme Cash/Scrip Privatisation Offer

The irrevocable (31.03% of outstanding shares) ensure that shareholders with blocking or close to blocking stakes are supportive. This is a done...

Arun George

Last Week in Event SPACE: HK Southbound, Jardine Cycle, Keisei/Oriental Land, BHP/Anglo American

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Straits Trading Cheap As ARA Asset Exposure Monetized

After my insight - Ripe For Privatisation - in October 2020, Straits Trading nicely gained ~130% over 12 months. STR then realised a ~S$685.6mn...

David Blennerhassett

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ESR (1821 HK) Chips Away At Pre-Cons

Four of the eight key pre-conditions are now in the bag. And irrevocable undertakings have also been bolstered. This is a done deal. It’s just a...

David Blennerhassett

ESR (1821 HK): HK$13.00/Share Offer

This is a done. Assuming early August completion - or eight months out - I'd pay ~HK$11.85/share for a 15% annualised return; up to HK$12/share if...

David Blennerhassett

ESR Group (1821 HK): Consortium’s Scheme Cash/Scrip Privatisation Offer

The irrevocable (31.03% of outstanding shares) ensure that shareholders with blocking or close to blocking stakes are supportive. This is a done...

Arun George

Last Week in Event SPACE: HK Southbound, Jardine Cycle, Keisei/Oriental Land, BHP/Anglo American

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Straits Trading Cheap As ARA Asset Exposure Monetized

After my insight - Ripe For Privatisation - in October 2020, Straits Trading nicely gained ~130% over 12 months. STR then realised a ~S$685.6mn...

David Blennerhassett