In today’s briefing:
- Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
- Rakuten Bank (5838 JP) Overnight Offering at a Fat Discount
- Nikkei 225 Index Rebalance Preview (Mar 2024): Update on Ranking, Capping, Funding & Other Changes
- Swire (19 HK / 87 HK) Announces NEW, Bigger, Better Buyback
- Toyota To Sell Harmonic Drive (6324 JP) Shares in Overseas Offering
- Rakuten Bank Placement – Was Expected at Some Point, Current Timing Seems Opportunistic
- Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
- StubWorld: Swire’s Latest Buyback
- Harmonic Drive Placement – Cleanup Share Sale Will Remove the Overhang
- Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.
Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
- Rakuten Bank (5838 JP) (RB), the online banking arm of Rakuten Group (4755 JP), raised around US$630m in its Japan IPO. Its IPO linked lockup will expire soon.
- RB is the largest internet bank in Japan, by number of accounts. As of Jun 23, it had 14.0m deposit accounts with a total deposit base of JPY9.4tn.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Rakuten Bank (5838 JP) Overnight Offering at a Fat Discount
- After the close today, Rakuten Group (4755 JP) announced the sale of 25.5mm shares of Rakuten Bank (5838 JP), right as the IPO lockup was reaching its expiry. Expected.
- Pricing is 6-7 Dec (pre-Tokyo open 7 Dec), delivery 11 Dec 2023. Indicative price range is 8.5-12.5% discount for a deal of US$425mm or so.
- In an interesting technical detail, this will take Rakuten below 50%. There is some near-term index demand, some in April, some next October. Rheos could be more overhang.
Nikkei 225 Index Rebalance Preview (Mar 2024): Update on Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 (NKY INDEX) March rebalance ends end January. There could be three changes at the rebalance with sector balance in focus.
- Depending on the changes, passives trackers will need to buy 2.4-22.5x ADV (10-24% of real float) on the inclusions and sell between 3.5-42.5x ADV on the deletions.
- Fast Retailing (9983 JP) capping, Nitori Holdings (9843 JP) increase in PAF, a big funding trade, and potentially new stocks being added in two-steps.
Swire (19 HK / 87 HK) Announces NEW, Bigger, Better Buyback
- Yesterday afternoon, Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK) announced a new buyback program. The last one was announced August 2022 and ran until the AGM.
- That was HK$4bn. In the meantime the company paid an HK$8.12 special div on the Swire As (14%) in September (on top of the HK$1.20 regular div).
- Now they have announced a new HK$6bn buyback buying both A Shares and B shares. Details, index impact, historical B/A trading patterns, etc, below.
Toyota To Sell Harmonic Drive (6324 JP) Shares in Overseas Offering
- Today, Toyota Motor (7203 JP) announced it would sell 4.379mm shares (4.55%) of Harmonic Drive Systems (6324 JP) in an overseas placement.
- This is not so big as it is emblematic, adding to the recent news on Toyota unwinds.
- Harmonic Drive is heavily held by foreign institutions. This is a foreigners-only deal. But it will need to be absorbed by that group too.
Rakuten Bank Placement – Was Expected at Some Point, Current Timing Seems Opportunistic
- Rakuten Group (4755 JP) aims to raise US$430m via selling around 14.6% of Rakuten Bank (5838 JP).
- RB is the largest internet bank in Japan, by number of accounts. As of Sep 23, it had 14.3m deposit accounts with a total deposit base of JPY9.5tn.
- In this note, we will talk about the deal dynamics and updates since our last note.
Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
- Rakuten Group (4755 JP) is looking to sell 25.5m shares of Rakuten Bank (5838 JP) via a secondary offering at a discount of between 8.7%-12.3%.
- The offering will raise a maximum of US$433m and Rakuten Group (4755 JP) will use the funds to reduce its interest-bearing debt by the early repayment of its bonds.
- There will be limited passive buying at the time of settlement of the stock but there is an index inclusion coming up that will result in passives buying.
StubWorld: Swire’s Latest Buyback
- Yesterday afternoon (5th Dec), Swire Pacific (A) (19 HK) (and Swire Pacific (B) (87 HK)) announced a large (HK$6bn) buyback.
- The response this morning sees Swire A up 14.4% (as I type), and 11.8% for Swire Bs.
- I still like the idea of buying Swire A and Swire B outright here.
Harmonic Drive Placement – Cleanup Share Sale Will Remove the Overhang
- Toyota Motor (7203 JP) is looking to raise US$116m from selling its entire stake in Harmonic Drive Systems (6324 JP).
- Toyota Motors has indicated over the past one-two weeks that it will be looking to sell/trim its stakes in various entities as part of its exit from its multiple cross-holdings.
- While the deal would be a relatively large one to digest at 10 days of ADV, Toyota Motors will be selling its entire stake, clearing the overhang.
Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.
- Yesterday, Tokyo Rakutenchi (8842 JP)‘s #1 shareholder Toho Co Ltd (9602 JP) agreed to buy out the rest of Tokyo Rakutenchi from its #2 and #3 shareholders and minorities.
- The Takeover Price is a 51% premium. Which is nice. But the asset is a real estate portfolio, and it was sold as a company, not a real estate portfolio.
- The revaluation surplus to market value for the real estate assets is more than net equity, so Takeover PBR >1.0, but Price/NAV of the takeover is 0.7x, without synergies included.
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