In today’s briefing:
- Adani Family Sells Stakes To GQG
- Long Short Setup Candidate: Posco Holdings & Celltrion with TIGER Top 10 Rebalancing
- KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
- Ihara Science (5999 JP) – Not Over But Not a Great Look
- InvoCare (IVC AU): TPG Capital Makes a Move
- Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
- Kakao Announces a Tender Offer of SM Entertainment at 150,000 Won Per Share
- Kakao’s Tender Offer to SM Ent Shareholders: Key Details of Disclosure Filed This Morning
- YES Bank Lock-Up Expiry: Forced Sellers, Overhang & Index Implications
Adani Family Sells Stakes To GQG
- Late Thursday night, the Adani Group announced that the family entities had sold Rs 154bn or US$1.8bn+ of stock in four listed entities to Australian-listed GQG Partners (GQG AU).
- GQG is a US$90bn AUM asset manager specialising in emerging markets. They bought stakes of 2.55-4.10% in each of four entities.
- This “increases” float, but doesn’t. As of now, this will partially offset one MSCI downweight in May, and will likely cause three FIF uplifts.
Long Short Setup Candidate: Posco Holdings & Celltrion with TIGER Top 10 Rebalancing
- Celltrion and Posco Holdings will switch places. Although there is still time until the screening period, the market capitalization gap between them has already widened significantly.
- Posco Holdings will likely welcome a passive inflow of 0.44x ADTV, whereas Celltrion is expected to face outflows of around 0.69x ADTV.
- Ecopro BM entered the Top 20 (preliminary screening table) with a YTD stock price increase of 130%, becoming the first KOSDAQ-listed company to do so.
KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
- Two thirds of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX).
- One-Way turnover is estimated at 3.5%. Impact on the expected deletions is a lot higher than the impact on the expected inclusions and shorts are building up on the deletes.
- Since the start of the review period, the potential inclusions have outperformed the potential deletions by nearly 50% and the KOSDAQ 150 Index (KOSDQ150 INDEX) by over 20%.
Ihara Science (5999 JP) – Not Over But Not a Great Look
- Today after the close, Ihara Science (5999 JP) reported on TDNet a forthcoming change in the Tender Offer Registration Statement by MBO bidder N.I.M.
- N.I.M. and normally-known-as-deep-value-activist NAVF (a.k.a. Nippon Active Value Fund), Ihara Science’s #2 shareholder, signed a Tender Offer Agreement whereby NAVF agreed to tender.
- It got a little more complicated 90mins later, but this was an announcement which did not need to be made. It begs the question of why. And what next.
InvoCare (IVC AU): TPG Capital Makes a Move
- AFR reports that TPG Capital, through UBS, is seeking to acquire 14.4m or 10.00% of Invocare Ltd (IVC AU)‘s outstanding shares at A$12.65, a 41.3% premium to the undisturbed price.
- If the aftermarket raid is successful, TPG will follow the tried-and-test private equity playbook of securing a pre-bid stake before lobbing a non-binding offer at A$12.65 per share
- TPG has timed its move to take advantage of the post-results price slump. While not a knockout offer, it is a starting point for the Board to secure better terms.
Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
- Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
- We have looked at the deal in our past note, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback.
- In this note, we talk about the updates since our last note and have a look at some of the past deals.
Kakao Announces a Tender Offer of SM Entertainment at 150,000 Won Per Share
- On 7 March, Kakao Corp (035720 KS) announced a tender offer of up to 35% of outstanding shares of SM Entertainment at 150,000 won per share.
- We believe that this will be a successful tender offer and the share price of SM Entertainment is likely to surge to near 150,000 won per share.
- The minority shareholders of SM Entertainment are cheering on as its share price appreciation will be nearly 96% from end of 2022 to the tender offer price of 150,000 won.
Kakao’s Tender Offer to SM Ent Shareholders: Key Details of Disclosure Filed This Morning
- Kakao and Kakao Entertainment each plan to purchase 4.167 million shares at ₩150,000 per share, totaling 8.33 million. This is a 14.5% premium to the last close.
- The tendering ending date is March 26th, Sunday, so the actual ending date is March 24th. Since Korea adopts the T+2 settlement system, stocks must be purchased by the 22nd.
- The price of SM may decline towards below the tender price relatively quickly as a large number of retail investors will likely bet on the prolonged proxy battle.
YES Bank Lock-Up Expiry: Forced Sellers, Overhang & Index Implications
- The lock-up on nearly 9.4bn shares of Yes Bank (YES IN) expires on 13 March. Most of that is from the banks that helped in the recapitalisation in March 2020.
- There will be forced sellers as soon as the lock-up ends, and there will be other sellers that will want to sell.
- The forced and discretionary selling will be offset to a very small extent by inflows from passive trackers in May/June as the free float for the stock increases.
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