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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Last evening, the Index Maintenance Sub-Committee (IMSC) of NSE Indices announced the results of the March index review for the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index (NIFTY INDEX)</a>. The rebalance will be effective after the close of trading on 30 March and passive funds will need to trade at the close (VWAP over the last 30 minutes of trading) on the day.<a href="https://www.smartkarma.com/entities/tata-consumer-products" target="_blank" data-smartkarma-citation="entities:258:1" rel="noopener">Tata Consumer Products (TATACONS IN)</a> has been included in the index and replaces <a href="https://www.smartkarma.com/entities/gail-india-ltd" target="_blank" data-smartkarma-citation="entities:15263:1" rel="noopener">Gail India Ltd (GAIL IN)</a>. This is in line with what we expected and makes <a href="https://www.smartkarma.com/entities/tata-consumer-products" target="_blank" data-smartkarma-citation="entities:258:1" rel="noopener">Tata Consumer Products (TATACONS IN)</a> the fifth Tata group company to be included in the index.NSE indices have also announced a number of changes to other indices. There are 7 changes to the NIFTY Next 50 (which together with the NIFTY 50 makes up the NIFTY 100) with <a href="https://www.smartkarma.com/entities/adani-enterprises-ltd" target="_blank" data-smartkarma-citation="entities:245:1" rel="noopener">Adani Enterprises (ADE IN)</a>, <a href="https://www.smartkarma.com/entities/apollo-hospitals-enterprise" target="_blank" data-smartkarma-citation="entities:880:1" rel="noopener">Apollo Hospitals Enterprise (APHS IN)</a>, <a href="https://www.smartkarma.com/entities/gail-india-ltd" target="_blank" data-smartkarma-citation="entities:15263:1" rel="noopener">Gail India Ltd (GAIL IN)</a>, <a href="https://www.smartkarma.com/entities/jubilant-foodworks-ltd" target="_blank" data-smartkarma-citation="entities:986:1" rel="noopener">Jubilant Foodworks (JUBI IN)</a>, <a href="https://www.smartkarma.com/entities/mrf-ltd" target="_blank" data-smartkarma-citation="entities:2930:1" rel="noopener">Mrf Ltd (MRF IN)</a>, <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> and <a href="https://www.smartkarma.com/entities/yes-bank-ltd" target="_blank" data-smartkarma-citation="entities:767:1" rel="noopener">Yes Bank (YES IN)</a> replacing <a href="https://www.smartkarma.com/entities/bank-of-baroda" target="_blank" data-smartkarma-citation="entities:545:1" rel="noopener">Bank Of Baroda (BOB IN)</a>, <a href="https://www.smartkarma.com/entities/container-corp-of-india-ltd" target="_blank" data-smartkarma-citation="entities:17912:1" rel="noopener">Container Corp of India (CCRI IN)</a>, <a href="https://www.smartkarma.com/entities/general-ins-corp-of-india" target="_blank" data-smartkarma-citation="entities:25944:1" rel="noopener">General Insurance Corp Of India (GICRE IN)</a>, <a href="https://www.smartkarma.com/entities/hindustan-zinc-ltd" target="_blank" data-smartkarma-citation="entities:8688:1" rel="noopener">Hindustan Zinc (HZ IN)</a>, <a href="https://www.smartkarma.com/entities/oracle-financial-services" target="_blank" data-smartkarma-citation="entities:7775:1" rel="noopener">Oracle Financial Services (OFSS IN)</a>, <a href="https://www.smartkarma.com/entities/power-finance-corporation" target="_blank" data-smartkarma-citation="entities:13579:1" rel="noopener">Power Finance (POWF IN)</a> and <a href="https://www.smartkarma.com/entities/tata-consumer-products" target="_blank" data-smartkarma-citation="entities:258:1" rel="noopener">Tata Consumer Products (TATACONS IN)</a>.Changes have also been made to the index methodology. The main change from the perspective of the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index (NIFTY INDEX)</a> is that the index reviews will be effective after the close on the second last working day of the review month. The existing methodology specifies that the index review will be effective after the close on the F&amp;O expiry day (last Thursday) of the review month.<div class="content-highlight">This Insight has been marked as Bullish since TATACONS could outperform its peers in the near term.</div>

Last evening, the Index Maintenance Sub-Committee (IMSC) of NSE Indices announced the results of the March index review for the NIFTY Index (NIFTY INDEX). The rebalance will be effective after the close of trading on 30 March and passive funds will need to trade at the close (VWAP over the last 30 minutes of trading) on the day.Tata Consumer Products (TATACONS IN) has been included in the index and replaces Gail India Ltd (GAIL IN). This is in line with what we expected and makes Tata Consumer Products (TATACONS IN) the fifth Tata group company to be included in the index.NSE indices have also announced a number of changes to other indices. There are 7 changes to the NIFTY Next 50 (which together with the NIFTY 50 makes up the NIFTY 100) with Adani Enterprises (ADE IN), Apollo Hospitals Enterprise (APHS IN), Gail India Ltd (GAIL IN), Jubilant Foodworks (JUBI IN), Mrf Ltd (MRF IN), Vedanta Ltd (VEDL IN) and Yes Bank (YES IN) replacing Bank Of Baroda (BOB IN), Container Corp of India (CCRI IN), General Insurance Corp Of India (GICRE IN), Hindustan Zinc (HZ IN), Oracle Financial Services (OFSS IN), Power Finance (POWF IN) and Tata Consumer Products (TATACONS IN).Changes have also been made to the index methodology. The main change from the perspective of the NIFTY Index (NIFTY INDEX) is that the index reviews will be effective after the close on the second last working day of the review month. The existing methodology specifies that the index review will be effective after the close on the F&amp;O expiry day (last Thursday) of the review month.This Insight has been marked as Bullish since TATACONS could outperform its peers in the near term.

NIFTY50 Index Rebalance: TATACONS In, GAIL Out; Methodology Changes Too

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: JD.com, CNOOC, Coca Cola Amatil, Kunlun Energy, Honshu Chemical, Toa Oil

Travis Lundy

Equity Bottom-Up

In mid-December, eight trading days after Vedanta promotor Anil Agarwal said the promoter (Vedanta Resources, himself, the associated companies) had no plans at all to increase their stake in <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> and no plans to make an Open Offer, the promoter launched a block bid to buy 4.98% in a post-market trade. The shares had climbed more than 50% in the previous two months to Rs 150/share, but the deal got done at Rs 160/share.Less than three weeks later, two entities controlled by <a href="https://www.smartkarma.com/entities/vedanta-resources-limited" target="_blank" data-smartkarma-citation="entities:22202:1" rel="noopener">Vedanta Resources (VED LN)</a> announced an intention to conduct an Open Offer to buy another 10% of its main Indian-listed asset, VEDL at the same Rs. 160/share price as the clearing price. But by that time (9 January), the price had risen past Rs. 180/share as global market movements had propelled gains in cyclicals and commodity markets had propelled the underlying products.But even then, VEDL was quite cheap on a relative basis. The question was about the nature of the Open Offer. Was it a real Open Offer?  Or was it designed for another purpose in mind? We still do not know the answer, but on 18 February the stock reached a new 2-year intraday high, closing at Rs. 195+/share. And VEDL is still not expensive vs peers. Q3 results at both HZ and at VEDL ex-HZ were great. VEDL ex-HZ Operating Income was the highest since March 2014, and VEDL ex-HZ Net Income in Q3 was the second highest non-accounting gimmick Net Income ever?Looking forward, consensus on VEDL is stale. It shows the largest negative number for VEDL ex-HZ OP in the modern VEDL era in Q4 this year despite strong commodity pricing.And VEDL still owes a lot of back dividends to its shareholders. And we await the Open Offer details.This and a lot more below.

In mid-December, eight trading days after Vedanta promotor Anil Agarwal said the promoter (Vedanta Resources, himself, the associated companies) had no plans at all to increase their stake in Vedanta Ltd (VEDL IN) and no plans to make an Open Offer, the promoter launched a block bid to buy 4.98% in a post-market trade. The shares had climbed more than 50% in the previous two months to Rs 150/share, but the deal got done at Rs 160/share.Less than three weeks later, two entities controlled by Vedanta Resources (VED LN) announced an intention to conduct an Open Offer to buy another 10% of its main Indian-listed asset, VEDL at the same Rs. 160/share price as the clearing price. But by that time (9 January), the price had risen past Rs. 180/share as global market movements had propelled gains in cyclicals and commodity markets had propelled the underlying products.But even then, VEDL was quite cheap on a relative basis. The question was about the nature of the Open Offer. Was it a real Open Offer?  Or was it designed for another purpose in mind? We still do not know the answer, but on 18 February the stock reached a new 2-year intraday high, closing at Rs. 195+/share. And VEDL is still not expensive vs peers. Q3 results at both HZ and at VEDL ex-HZ were great. VEDL ex-HZ Operating Income was the highest since March 2014, and VEDL ex-HZ Net Income in Q3 was the second highest non-accounting gimmick Net Income ever?Looking forward, consensus on VEDL is stale. It shows the largest negative number for VEDL ex-HZ OP in the modern VEDL era in Q4 this year despite strong commodity pricing.And VEDL still owes a lot of back dividends to its shareholders. And we await the Open Offer details.This and a lot more below.

Vedanta Soars Beyond Indicative Open Offer Level. Not Expensive

China Traditional Chinese Medicine / Event-Driven

China Traditional Chinese Medicine (570 HK)



For the month of January, 22 new deals were discussed on Smartkarma with an overall announced deal size of ~US$52bn.


Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow up discussions, or simply click on the insight link(s) below the name.





New Deals


Industry


Size (US$bn)


Type


Premium




Australia




Bingo Industries (BIN AU) 
Waste collection
1.8
Scheme
19.8%



Bingo Industries (ASX: BIN): Talking Trash
Bingo Industries (BIN AU): CPE/MIRA's Scavenger Hunt




Hong Kong




China Machinery Engineering (1829 HK) 
Construction
0.4
Merger by Absorption
45.1%



China Machinery Engineering (1829 HK): Possible Offer
China Machinery Engineering (1829 HK): Delisting Offer From Parent




Polytec Asset Holdings (208 HK) 
Real Estate
0.4
Scheme
61.3%


Polytec Asset (208 HK): Offer By Way Of A Scheme



HKC Holdings (190 HK) 
Holding Co.
0.2
Scheme
120.39%



China Renewable Energy (987 HK): Possible Privatisation Offer
HKC (190 HK): Take-Private Offer By Way Of A Scheme




New Century REIT (1275 HK) 
Hospitality
0.25
Scheme-like
14.3%


New Century (1275 HK): Closing Down Sale



Rivera Holdings (281 HK) 
Real estate
0.1
Scheme
62.5%


Rivera (281 HK): Scheme Or Face Delisting



China Traditional Chinese (570 HK) 
TCM
3.0
??
??


Trad Chi Med (570 HK): Sinopharm's Feverish Proposal



Zhejiang New Century Hotel (1158 HK) 
Hospitality
0.65
Merger by Absorption
24.7%


Zhejiang New Century (1158 HK): Pre-Conditional Offer



Zhuhai Holdings Investment (908 HK) 
Ports
0.2
Scheme
37.8%


Zhuhai Holdings (908 HK): Zhuhai SASAC Reloads With Scheme Offer



India




Engineers India (ENGR IN) 
Engineering
0.1
Buyback tender
10%


Hefty Engineers India Buyback Tender - Worth The Arb If You Own



Japan




Tokyo Rope Mfg (5981 JP) 
Wire rope
0.2
Partial
39%



Nippon Steel's HOSTILE Partial Tender Offer for Tokyo Rope: A Move to Mark Territory?
New Money for Old Rope? Gaming Out A Hostile Partial Offer on Tokyo Rope (5981)




Singapore




CEI Limited (CEI SP) 
Electronics
0.1
VGO
16.2%


CEI Limited (CEI SP): Privatization Deal by AEM Holdings (AEM SP) Trading with a View to Complete



GL Ltd (GLL SP) 
Hospitality
0.2
VGO
25.0%


GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco



Penguin International (PBS SP) 
Boat builder
0.1
VGO
30%


Penguin International (PBS SP): Friendly Privatization Deal Might Need A Bump



Europe




CA Immobilien Anlagen AG (CAI AV) 
Real estate
3.8
Offer
16.9%


CA Immo - Starwood: Mandatory Offer



Carrefour SA (CA FP) 
Convenience
20.0
Merger
29.3%


Carrefour - Alimentation Couche-Tard Non-Binding Offer



Enlabs AB (NLAB SS) 
Sports betting
0.3
Offer
1.1%


Enlabs - Entain Beefing Up



Entain (ENT LN) 
Entertainment
11.0
Offer
22%


MGM's Prospective Offer for Entain



Liberbank SA (LBK SM) 
Financing
0.9
Merger



Liberbank - Unicaja Agreed Merger



Naturgy Energy Group SA (NTGY SM) 
Energy
6.0
Partial offer
20%


IFM Investors to Launch a Partial Hostile Tender Offer for Naturgy



Handicare Group AB (HANDI SS) 
Medi aid
0.4
Offer
22.0%


Handicare - Savaria: Recommended Offer



Tikkurila Oyj (TIK1V FH) 
Paints
1.7
Offer
84.5%


Akzo Nobel Tops PPG's Offer for Tikkurila


Source: Smartkarma Insights




The average premium for the new deals announced (or first discussed) in January was ~35%. This compared to the average premium in 2020 and 2019 of 31% and 31.5% respectively. 




Summary of News in January of Arb Situations On Smartkarma's Radar


(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation. Where a new insight was written on these names in July, I've included a link, in bold, to that insight in italics.)






Australia


Comments (with links to announcements &amp; insights)




3P Learning (3PL AU) 

21-Jan: Non-binding term sheet entered into




amaysim Australia (AYS AU) 

18-Jan:
WAM Capital Ltd (WAM AU) has bumped its Offer for amaysim Australia (AYS AU) to 1 new WAM share for every 2.675 AYS share; or A$0.70/share cash per share, from 1 new WAM share for every 2.7 AYS share; or A$0.695/share cash per share. AYS' largest shareholder, Longfrist with 19.19%, supports WAM's Offer.




Asaleo Care Ltd (AHY AU) 

27-Jan: Independent board rejects non-binding proposal




Cardinal Resources (CDV AU) 

27-Jan: Shandong to compulsory acquire shares. Shares to be cease trading on the 3 Feb




Coca Cola Amatil (CCL AU) 

6-Jan: Coca-Cola Amatil Takeover Offer: A Bump Forthcoming?




Link Administration Holdings (LNK AU) 

3-Jan: SS&amp;C withdraws proposal for Link Administration Holdings (LNK AU).




Regis Healthcare (REG AU) 

20-Jan Washington H. Soul Pattinson and Co. (SOL AU)withdraws




Think Childcare (TNK AU) 

20-Jan: Think Childcare (TNK AU): Bigger Bid by Busy Bees




Vitalharvest Freehold Trust (VTH AU) 

No January update




WPP PLC (WPP LN) 

No January update










Hong Kong


Comments (with links to announcements &amp; insights)




Beijing Jingneng Clean Energy (579 HK) 

31-Dec: Beijing Jingneng (579 HK): Doc Out. IFA Says Fair &amp; Reasonable
11-Jan: As expected, SAIF (6.13% of total issued H  shares, and 11.53% of independent H shares; and Goldwind (2.83% &amp; 5.32% respectively) have given letters of intent to support the Offer. 
25-Jan:Quiddity M&amp;A : A Guide To Mergers By Absorption




Car Inc (699 HK) 

7-Jan: Car Inc (699 HK):  Are We Missing Anything?
26-Jan: Car Inc (699 HK):  No, We Are Not Missing Anything




China Logistics Property Holdings (1589 HK) 

18-Jan: Bloomberg is reporting that Blackstone Group Inc., ESR Cayman Ltd., and JD Logistics Inc. are among bidders for control of China Logistics Property Holdings (1589 HK). Meituan (3690 HK) is also reportedly in the mix.




Cowell E Holdings (1415 HK) 

1-Jan: Cowell E Holdings (1415 HK) delays the dispatch of the Composite Doc to the 22 January. 
15-Jan: Doc issued. Fist close is the 5 Feb




Huifu Payment Limited (1806 HK) 

27-Jan: Huifu Payment (1806 HK): Scheme Doc Out. IFA Says Fair




I.T Ltd (999 HK) 

20-Jan: Pre-cons satisfied. 




Shanghai Prime Machinery H (2345 HK) 

11-Jan: Shanghai Prime Machinery H (2345 HK) shareholders approved the merger. 12 Jan was the last day of trading. 




SHK Hong Kong Industries (666 HK) 

No January update




Tonly Electronics Holdings (1249 HK) 

29-Jan: Tonly Electronics (1249 HK): Scheme Doc Out. IFA Says Fair




China Zhongdi Dairy (1492 HK) 

18-Jan:  Zhongdi Dairy (1492 HK): Doc Out. Compulsory Acquisition Afforded










India


Comments (with links to insights)




Allcargo Logistics (AGLL IN) 

No January update




INEOS Styrolution India Limited (INEOS IN) 

No January update




Vedanta Ltd (VEDL IN) 

11-Jan: Vedanta (VEDL IN) Promoter To Launch an Open Offer To Buy More










Japan


Comments (with links to insights)




Cocokara Fine (3098 JP) 
No January update



Honshu Chemical Industry (4115 JP) 

No January update




Japan Asia (3751 JP) 

11-Dec: City Index Eleventh is now 14.91% of the register at Japan Asia (3751 JP).
18-Jan: Murakami Fund's Tender for JAG (3751):  May Be Rangebound Near-Term
26-Jan: Japan Asia Group (3751): Murakami Wins the Mother Of All Bumps +100% 




Joban Kaihatsu (1782 JP) 

4-Jan: Black Clover today reported they owned 12.29% of Joban Kaihatsu (1782 JP) 
23-Jan: Joban Kaihatsu MBO Price Bumped, Tender Extended: Still Not Rolling In Clover




Keihanshin Building (8818 JP) 

13-Jan Tender offer fails. Funny that. 




Kenedix Inc (4321 JP) 

9-Jan: Kenedix Inc (4321 JP) reported  that SMFL MIrai Partners had completed the Tender Offer for Kenedix shares and ended up with 62.35%
12-Jan: FTSE announced today that it would reduce the weight of Kenedix Inc (4321 JP) in its index from 97.7309% to 34.90958490918% while keeping the share count unchanged at 218,917,200 shares. The change takes place at the close of business on the 14th of January




Medical &amp; Biological Laboratories (4557 JP) 

Delisted 13 January




Pressance Corp (3254 JP) 

17-Jan: Pressance Partial Tender - Almost EVERYONE Tendered




Softbrain (4779 JP) 

Delisted on Jan 19




Tokyo Dome Corp (9681 JP) 

19-Jan: Mitsui Fudosan (8801 JP) announced the results of its Tender Offer for Tokyo Dome Corp (9681 JP). That will trigger an EGM and a resulting squeezeout.  It will also trigger a FTSE and MSCI downweight.




Toa Oil Co Ltd (5008 JP) 

13-Jan: Toa Oil (5008) Tender Offer Update - Looks Bumpity
14-Jan: Cornwall Capital announced it had increased its position in Toa Oil Co Ltd (5008 JP) from 20.86% (as of the last report) to 21.89% (as of the 6th of January). 
28-Jan: Cornwall Capital announced it had increased its position to 22.98%










Malaysia


Comments (with links to insights)




Batu Kawan Bhd (BAK MK) 

No January update




FGV Holdings Bhd (FGV MK) 

26-Jan: FGV (FGB MK): IFA Says Offer Not Fair








New Zealand


Comments (with links to insights and announcements)




Infratil Ltd (IFT NZ) 

28-Jan: Announced a strategic review of 51%-held Trustpower Ltd (TPW NZ) 








Philippines


Comments (with links to insights and announcements)




Lopez Holdings (LPZ PM) 

21-Jan: Tender Offer report despatched. Closing date is the 19 Feb,










Singapore


Comments 




Hi P International (HIP SP) 

No January update




Soilbuild Business Space REIT (SBREIT SP) 

24-Jan: First court hearing to be held on the 8 Feb.








Taiwan


Comments (with links to insights)




Jih Sun Financial (5820 TT) 

6-Jan: Fubon Financial Offer for Jih Sun Gets Even Weirder
7-Jan: Taiwanese news agency CNA has said that the FSC is investigating whether or not Capital Target Limited and its Responsible Officer Derek MD Chen (who I had believed to be the Responsible Person) is indeed the controller of Capital Target Limited.




Thinflex Corp (3144 TT) 

Tender Offer was completed, 100% pro-ration. (Japanese)













Europe/UK


Comments (with links to announcements and insights)




Altice NV A (ATC NA) 


22-Jan: Offer declared unconditional




Calisen PLC (1779730D LN) 


18-Jan: Sche doc issued




Entra ASA (ENTRA NO) 

No January update




KAZ Minerals (KAZ LN) 

25-Jan:  KAZ Minerals




Siltronic AG (WAF GR) 

25-Jan: GlobalWafers Ups Offer for Siltronic




Recipharm AB (RECIB SS) 
28-Jan: Roar bumps Offer



RSA Insurance (RSA LN) 
No January update



Tele Columbus AG (TC1 GR) 
No January update



Veolia Environnement SA (VIE FP) 
11-Jan: Veolia Steps up Pressure on Suez






Last Week in Event SPACE: OFAC's Longer List, TOPIX Free Float, PCCW, Jardines, Toa, Guoco, Sansan

India

Vedanta Limited is a leading global producer of metals, critical minerals, oil and gas, and technology. The company explores, extracts, and processes a diversified portfolio of resources including zinc, aluminum, copper, iron ore, and oil and gas. Vedanta Limited is headquartered in Mumbai, India, and was founded in 1979.

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Vedanta (VEDL US)

NIFTY50 Index Rebalance: TATACONS In, GAIL Out; Methodology Changes Too

TATACONS has been added to the NIFTY50 replacing GAIL. There are changes to a bunch of other indices too and methodology changes which shift the...

Brian Freitas

Last Week in Event SPACE: JD.com, CNOOC, Coca Cola Amatil, Kunlun Energy, Honshu Chemical, Toa Oil

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

Vedanta Soars Beyond Indicative Open Offer Level. Not Expensive

VEDL is STILL cheap to peers relative, on a stub basis, on a fundamental basis using current or forward EV/consensus EBIT or EBITDA. We await the...

Travis Lundy

(Mostly) Asia M&A: January 2021 Roundup

The average premium for the new deals announced (or first discussed) in January was ~36%. This compared to the average premium in 2020 and 2019 of...

David Blennerhassett

Last Week in Event SPACE: OFAC's Longer List, TOPIX Free Float, PCCW, Jardines, Toa, Guoco, Sansan

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

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