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Event-Driven and Index Rebalance

Jun 01
0

Weekly Top Ten Event-Driven and Index Rebalance – Jun 1, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Horizon Robotics (9660 HK): Southbound Stock Connect Inclusion Today & Upcoming Index Flows

By Brian Freitas, Periscope Analytics

  • Horizon Robotics (9660 HK) will be added to Southbound Stock Connect from the start of trading today. Then there will be passive buying at the close on 20 June.
  • The lock up expiry in April will result in large buying from trackers of the Hang Seng TECH Index (HSTECH INDEX) and HSIII Index in September.
  • The stock will also be added to another large global index, though the timing on inclusion is not certain at the moment.

2. Zomato/Eternal: The BIG Passive Selling Starts

By Brian Freitas, Periscope Analytics

  • Following shareholder approval of the proposal to reduce the Foreign Ownership Limit from 100% to 49.5%, NSDL has updated the FOL. This starts the process of passive selling in Zomato.
  • Passives will sell US$350m at the close on Tuesday. There is a low probability of more selling later in the week. There will be bigger selling in August.
  • The size of the selling in August and beyond will depend on what foreign investors do in the stock till the end of June. Watch the red flag/ breach list.

3. [Japan Activism/M&A] Taiyo Holdings (4626) Now an MBO Target? KKR and One More Bidding

By Travis Lundy, Quiddity Advisors

  • Taiyo Holdings (4626 JP) has an interesting background, embroiled in a separate activist event via its equity affiliate sponsor Dic Corp (4631 JP), and recently an activist target itself. 
  • Today a Bloomberg article said KKR and one other PE fund had made acquisition proposals via TOB. Taiyo confirmed, establishing a Special Committee. A deal is months away, at earliest.
  • Shares shot up to limit up, opened briefly, then resumed at limit up. The question here and now is valuation. 

4. [Japan M&A] Makino Milling (6135) – MBK as White Knight Appears To Have Made a Binding Bid

By Travis Lundy, Quiddity Advisors

  • In December, Nidec Corp (6594 JP) made an unsolicited bid for Makino Milling Machine Co (6135 JP). Makino wanted more time. Nidec wanted to squeeze.  Makino proposed a poison pill.
  • Makino appeared to act slowly but white knight bidders were mooted in the media. Nidec launched, but apparently approvals may have been hard. They withdrew. Makino cancelled the poison pill. 
  • Shares fell sharply. Yesterday, they rose because it appears Effissimo owns 3%. Today, we got news post-close that MBK may be close to making an ¥11,000+ bid.

5. [Japan M&A] NTT To Buy Out SBI Sumishin Net Bank (7163) At a HUGE Price for Minorities

By Travis Lundy, Quiddity Advisors

  • Late Nov-2024, SBI Sumishin Net Bank (7163 JP) was trading ¥2,900, weekly mag Bunshun scooped a possible NTT Docomo deal. The stock popped, I was skeptical. It popped more.
  • At Q3 earnings, NTT seemed to downplay the possibility saying they wouldn’t overpay. SBI Sumshin fell. Then fell some more. 
  • Today we get a deal whereby NTT buys out SBI Holdings (8473 JP)‘s 34% stake, and minorities, and partners with Sumitomo Mitsui Trust. Then a side deal with SBI. 

6. Tsuruha (3391 JP)/Welcia (3141 JP): Vote Musings

By Arun George, Global Equity Research Ltd

  • Leading proxies recommend that Tsuruha Holdings (3391 JP) shareholders vote against the Tsuruha/Welcia Holdings (3141 JP) merger on 26 May.
  • The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha vote will be close but likely to be approved. Long Tsuruha is the trade, irrespective of the vote.  
  • For a vote pass, you are long synergies and a likely partial offer bump. For a fail, you are long an undemanding multiple and the optionality of a new bid.      

7. A/H Premium Tracker (To 23 May 2025):  AH Premia Contract, H Premia Names Perform Best; Batteries!

By Travis Lundy, Quiddity Advisors

  • AH spreads are slightly narrower, but performance is concentrated in fewer names and broad spread volatility is up. BYD (1211 HK) now 5% through. CATL 10% through will help.
  • It feels like there were some concentrated shorts on H vs A. BYD performance on CATL and Hang Seng upweight/inclusion exacerbate the issue. CATL H less liquid than people think.
  • The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.

8. [Japan Activism/M&A] – Shareholders Approve Tsuruha/Welcia Merger – Now It’s Partial Offer+Synergies

By Travis Lundy, Quiddity Advisors

  • This morning the Nikkei reported shareholders of Welcia Holdings (3141 JP) and Tsuruha Holdings (3391 JP) approved their Merger. Activists opposed but it was going to be close at best.
  • As expected, Welcia shares popped, and the spread converged to 2% with Tsuruha falling back to just below ¥11,400. Some of this is unwind of speculative interest in Tsuruha.  
  • The new yuhos are out, which shows roughly where we stand (as of end-Feb, and some updates). Now the trade is NEWCO vs Aeon’s interest and NEWCO vs World.

9. NIFTY Index Outlook (With an Eye on Zomato’s Passive Selling Starting…)

By Nico Rosti, MRM Research

10. [Quiddity Index] GMO (9449) Sub GMO Financial Gate (4051) Moves to TOPIX

By Travis Lundy, Quiddity Advisors

May 25
0

Weekly Top Ten Event-Driven and Index Rebalance – May 25, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. CATL (3750 HK): Reassessing Index Fast Entry; Need Overallotment Exercised by Tomorrow

By Brian Freitas, Periscope Analytics

  • CATL (3750 HK) is trading at a 6.9% premium to Contemporary Amperex Technology (CATL) (300750 CH) – if that is due to expectations of Fast Entry, that premium could drop.
  • CATL (3750 HK) has not announced the overallotment option as exercised and that puts Fast Entry at risk. An announcement prior to the close tomorrow could lead to Fast Entry.
  • The earliest inclusion could be at the close on 30 May while the other global index inclusion looks likely in December.

2. [Japan M&A/Activism] Toyota Industries (6201) Deal Could Be Announced Near-Term

By Travis Lundy, Quiddity Advisors

  • Friday 25 April, Toyota Industries (6201 JP) released earnings for last year, guidance for this year and a Bloomberg scoop suggested Toyota Motors chairman Akio TOYODA would launch an MBO.
  • In some ways surprising, but activists/”noisy shareholders” and TSE guidance on dual listings caused pressure, and Toyota Motors was trying to walk the good governance walk.
  • I discussed the situation here on Day 1, and here a few days later. Long-only shareholders sold. Today, Kyodo had a follow-up article. Then Nikkei. Looks more solid now. 

3. CATL (3750 HK): The Tail Wags the Dog

By Brian Freitas, Periscope Analytics

4. CATL (3750 HK)’s Concentration Warning

By David Blennerhassett, Quiddity Advisors

  • Contemporary Amperex Technology (3750 HK) (CATL H), a global leader in providing battery solutions, was listed on the 20th May at $263/share. Here is the prospectus.
  • Via the H-share listing, CATL raised ~US$5.2bn. Shares have since gained ~26% and trade at HK$330/share, as I type.
  • It is worth noting the HKEx issued a high concentration warning in CATL’s H shares the day before shares were listed.

5. [Japan Activism/M&A] – Thinking About Positioning Around the Tsuruha/Welcia Vote

By Travis Lundy, Quiddity Advisors

  • The Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) AGMs to elect directors and approve the share exchange agreement to merge the two. 
  • 10% Tsuruha shareholder Orbis objects to the merger ratio AND the later tender whereby Aeon goes to 51%, saying everything is underpriced. ISS/GlassLewis recommend voting against the merger.
  • I haven’t seen the proxy reports but I’ve done the math. Investors/arbs should look at the possibilities/probabilities and understand what dependencies exist. Shareholders are not helpless, no matter the outcome.

6. [Japan M&A] Mitsubishi Logisnext (7105) – The Deal Still Looks Mighty Good

By Travis Lundy, Quiddity Advisors

  • On 9 May Mitsubishi Logisnext Co., Ltd. (7105 JP) delayed earnings by 30 minutes. Shares popped. Then earnings were released, no deal, and shares crashed. Now they are rebounding.
  • But they remain volatile and subject to dips like the one this AM -5% at one point. Fears may be due to the idea that first smoke here was Dec-2024.
  • 5 months later, no deal yet. Bids were due pre-earnings but with tariffs and writedowns, one wonders if bidders were waiting for results.

7. Melco (200 HK) Trading “Cheap” Into Rights Issue

By David Blennerhassett, Quiddity Advisors

8. Toyota Industries (6201 JP): A Potential Privatisation Sooner than Expected

By Arun George, Global Equity Research Ltd

  • Kyodo news agency reported that Toyota Industries (6201 JP) plans to accept a tender offer by Toyota Motor (7203 JP) and Toyota Chairman Akio Toyoda, potentially in May or June.
  • The Nikkei reported that Toyota plans to borrow JPY3 trillion to fund the acquisition. These articles provide more clarity on price, composition of the offeror, financing structure, and timeline. 
  • These articles increase the probability of a tender offer around JPY18,515 (JPY6 trillion market cap). At the last close, the gross spread was 12.1%.

9. [Japan Buybacks] ShinEtsu Chem (4063) – How the FCSR Works

By Travis Lundy, Quiddity Advisors

  • Late April, Shin Etsu Chemical (4063 JP) announced a huge ¥500bn 200mm shares (10.2%) buyback. That was never ever going to happen. That needed a ¥2500 share price, not ¥4300+.
  • But it was big, and started in late May. Today, they announced how. It is a “Japan ASR”, the Nomura version, this time with an interesting twist.
  • In response to a couple of reader questions today, I provide a brief overview of how these things work. 

10. Soundwill Holdings (878 HK): An Opportunity or Another HK Arbageddon?

By Arun George, Global Equity Research Ltd

  • The spread to the Foo family’s HK$8.50 offer for Soundwill Holdings (878 HK) has materially increased to 15.8% over the last two trading days. The vote is on 23 May. 
  • Several readers have asked if the Soundwill offer will mirror the Goldlion Holdings (533 HK) deal break. The two schemes share similarities but are also different in several ways.
  • The share price action either reflects an imminent deal break or a result of a negative feedback loop. Tread carefully as this is a high-risk/high-reward situation.
May 18
0

Weekly Top Ten Event-Driven and Index Rebalance – May 18, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. CATL (3750 HK) H-Share IPO: Fast Entry to Global Indices Is Touch & Go

By Brian Freitas, Periscope Analytics

  • Contemporary Amperex Technology (CATL) (300750 CH) could raise up to US$5.1bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
  • There is a huge allocation to cornerstone investors that is locked up for 6 months. That significantly reduces float and the probability of Fast Entry inclusion to global indexes.
  • CATL (3750 HK) will be added to Southbound Stock Connect from the open of trading on 16 June following the end of the Price Stabilisation period.

2. Renesas Electronics (6723 JP): Denso Exits as Stock Price Falters

By Brian Freitas, Periscope Analytics

  • Denso Corp (6902 JP) is looking to raise up to JPY137bn (US$940m) by selling 73.9m shares of Renesas Electronics (6723 JP) to international investors.
  • The indicative price range is JPY 1,812-1,848/share, a discount of 1-2.95% to Monday’s close. The placement is 4.1% of shares outstanding and is 4.7 days of ADV.
  • We do not expect any passive buying at the time of settlement of the placement shares. The earliest passive buying will take place in August and September.

3. Mayne Pharma (MYX AU): MAC Musings

By David Blennerhassett, Quiddity Advisors

  • Back on the 21st Feb 2025, Mayne Pharma (MYX AU), a leader in dermatology and women’s health, entered into a Scheme with US-based pharmaceutical outfit, Cosette Pharmaceuticals, at A$7.40/share. 
  • The transaction is progressing – the HSR Act condition was satisfied last week. A Scheme Booklet should be issued shortly, with an expected vote mid-June and late-June/early-July implementation. 
  • Shares declined 3.1% yesterday over concerns a MAC could be triggered on the back of the Trump’s executive order on pharma. The impact is likely mixed, but leans neutral.

4. Korean Market Election Setup: Locals’ Low PBR Trading Trends

By Sanghyun Park, Clepsydra Capital

  • Quick screen shows ₩1T+ names under 0.4x PBR — mostly retail, financials, and holdcos. Locals are keeping an eye on these with the election theme in play.
  • This isn’t just hopeful chatter — both parties are seriously leaning into value-up policies. With dividend tax reform and solid sector catalysts, locals see real potential in the post-election trade.
  • Long regional banks, hedge with KB and Shinhan. In retail, long domestic names, short China-dependent ones. For holdcos, long Hanwha and Doosan, short CJ and Kolon.

5. [Japan M&A] Son of Chairman/55%Owner Taking Imagica (6879) Private at 10x FCF, 4+x EBITDA. CHEAP.

By Travis Lundy, Quiddity Advisors

  • This deal should not come as a surprise. Bloomberg has an article out saying tycoons are taking companies private to avoid shareholder activism. It’s not just that.
  • The stated reasons (competitive environment requiring faster decision-making and significant restructuring) are all kinda hot garbage. This is being done at adjusted EV/EBITDA of 4x and 10x FCF.
  • And there are no synergies counted, and half of the Adjusted EV is net receivables+inventory equal to about 2mos of revenues. This is being done too cheaply. But…. TIJ baby…

6. Goldlion Holdings (533 HK): An Unexpected HK Arbageddon

By Arun George, Global Equity Research Ltd

  • Goldlion Holdings (533 HK) shareholders have voted against Mr Tsang’s HK$1.5232 per share offer. The minority participation rate was high, and the NO vote comfortably cleared the threshold.
  • The Goldlion deal break was unexpected, and the HKEx merger arb rulebook will be rewritten. This deal break offers several lessons.
  • Goldlion had the highest premium of the pre-deal break price to the undisturbed price compared to previous deal breaks. My estimated deal-break price is HK$0.953, 36.0% below last close.

7. [Japan Activism] Murakami Owns ~42% and Company Announces 31.3% Buyback

By Travis Lundy, Quiddity Advisors

  • With earnings today (which beat guidance), Mitsui Matsushima (1518 JP) announced upbeat guidance for next year, a very large dividend hike from ¥130/share to ¥230/share, and a Very Large Buyback.
  • The buyback is ¥20bn (vs ¥47bn market cap) or 3.5mm shares (31.3%). It starts 2 June. Astute Murakami trackers may recognise the potential pattern here.
  • If the company buys back all 3.5mm shares at just below book, EPS of ¥756 = 12.9% ROE and PER of 7.8x. Even up 30% from here that isn’t super-rich.

8. [Japan M&A] Bain Deal for Nissin (9066) Is Still Light Vs Comparable Deals

By Travis Lundy, Quiddity Advisors

  • The deal price is higher than the Bloomberg article insinuated. The closing date is earlier than the Bloomberg article suggested. But that doesn’t mean it’s enough. 
  • The Large ToSTNeT-3 buyback last year changed the shareholder structure significantly, but many holders who sold are unknown. I would expect they were cross-holders. 
  • For that, this deal is NOT a done deal. There may be games played on this deal. 

9. [Japan M&A] TechnoPro Holdings (6028) May Be Up For Grabs

By Travis Lundy, Quiddity Advisors

  • Technopro Holdings (6028 JP) is a temp/contract staffing platform which specialises in engineering staff (IT engineers far more than machinery, construction, chemicals). The company has been growing.
  • Overnight, an article appeared in MergerMarket – a high-dollar M&A-related news service – saying the company was going through a sale process. The company confirmed it was one possibility.
  • The stock went limit up. This quick writeup looks at the framework of the idea, and possibilities.

10. Jiangsu Hengrui (1276 HK) H-Share IPO: Index Inclusion Later This Year

By Brian Freitas, Periscope Analytics

  • Jiangsu Hengrui Medicine (600276 CH) could raise up to US$1.6bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
  • There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the possibility of Fast Entry inclusion to global indexes.
  • Jiangsu Hengrui (1276 HK) should be added to Southbound Stock Connect from the open of trading on 20 June following the end of the Price Stabilisation period.
May 11
0

Weekly Top Ten Event-Driven and Index Rebalance – May 11, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. NTT (9432) To Overpay To Take Over NTT Data (9613) Subsidiary?

By Travis Lundy, Quiddity Advisors

  • This morning, the Nikkei says NTT (Nippon Telegraph & Telephone) (9432 JP) has decided, 5 years after taking Docomo private, to buy out minorities in NTT Data Corp (9613 JP). 
  • NTT owns 58%. The article suggests a “30-40% premium” (¥3,900-4,200) “is likely”, with the parent spending ¥2-3trln (¥3,380-5,060) on the deal. The numbers are a bit all over the place.
  • It will go limit up today to ¥3,492. A deal should be announced today after the close when NTT Data reports earnings. There’s a cool index event too.

2. CATL (300750 CH): Index Inclusion as Potential Listing Nears

By Brian Freitas, Periscope Analytics

  • Reports continue to indicate a US$5bn raise for CATL H-shares with a discount of up to 10% to CATL (300750 CH) and with cornerstone investors taking up half the deal.
  • The company is currently gauging investor demand. The IPO could open next week and the H-shares could list later this month.
  • Index Fast Entry largely depends on the cornerstone investor allocation. Float higher than 50%/60% is required for Fast Entry to global indices.

3. ShinKong (2888 TT)/Taishin (2887 TT) – Time To Deal Is Shorter, But Risk To Peers Is Higher

By Travis Lundy, Quiddity Advisors

  • The last couple of days have seen the TWD increase value against the USD extremely sharply. This has caused the Shin Kong/Taishin risk arb spread to widen. 
  • There is no expectation that the merger will be delayed, but the change in USDTWD rate introduces a new dynamic into the ShinKong-as-Taishin-vs Peers trade.
  • Careful consideration of this trade going forward is worthwhile. What may have been the better trade may no longer be the better trade.

4. Laopu Gold (6181 HK): US$300m Primary Placement & Index Inclusion Green Light

By Brian Freitas, Periscope Analytics

  • Full circulation implementation at the beginning of April derailed Laopu Gold (6181 HK)‘s chances of global index inclusion in May. 
  • The company has now launched a US$300m primary placement that will significantly improve chances of inclusion in the same global index in August.
  • Laopu Gold (6181 HK) will also be added to another global index in September, so there are a few index inclusions likely for the stock this year. 

5. [Japan M&A] NTT (9432) Overpays To Buy Out NTT Data (9613) Minorities

By Travis Lundy, Quiddity Advisors

  • Pre-Open, we got a Nikkei article which suggested four different prices possible. We got something in the middle. I think NTT is probably overpaying here.
  • There is a fair bit of transparency in the documents and valuation. That is encouraging. There are no synergies counted in the fair calculations. That is discouraging.
  • This will not trade like a “normal” Japan risk arb situation. There will be nuances. 

6. Rare Arb Opportunity from ATS Breakout in Korea: Day-Night Spread

By Sanghyun Park, Clepsydra Capital

  • Local traders are targeting the spread between day and NXT’s after-hours, a classic arb play similar to what Japanese instos used when ATS first launched, now emerging in Korea.
  • The gap persists because institutional flow on NXT is still minimal, with recent data showing instos accounting for just 1-2% of total turnover.
  • NXT’s night session is seeing heavy retail flow, providing instos with the liquidity to trade. This creates a rare opportunity to capitalize on early inefficiencies before others catch on.

7. [Japan M&A] MitCorp (8058) Buys Out Subsidiary Mitsubishi Shokuhin (7451) – Bad Process, Bad Price

By Travis Lundy, Quiddity Advisors

  • Mitsubishi Shokuhin (7451 JP) was supposed to announce earnings at 2pm JST. They didn’t. Someone (or people) decided that meant there might be a takeover. There was.
  • The stock popped nearly 15% to ¥6,200, paused, was flat for an hour, then popped again, closing at ¥6,150/share. Post-close, we get a deal at ¥6,340/share.  
  • A disappointing process. At ¥6,240, the Special Committee said it was “far from a standard that takes into account the interests of TargetCo’s minority shareholders.” At ¥6,340, they dealt. Aaaargh.

8. [Japan M&A] YAGEO Overbids Minebea’s Overbid of YAGEO’s Overbid of Minebea’s Overbid – The Endgame

By Travis Lundy, Quiddity Advisors

  • Yageo Corporation (2327 TT) has now strongly overbid Minebea’s weak overbid of Yageo’s strong overbid of Minebea’s weak overbid of Yageo’s initial hostile offer for Shibaura Electronics (6957 JP). 
  • We are now 40% higher than the initial bid and the best bid is approaching the top end of Valuation Agent’s top-of-DCF-range prices. There may be a bit more. Maybe.
  • The question now is only whether Minebea responds. If it does, there is a little juice left, but if not, that’s it. It should get done.

9. [JAPAN M&A] Shionogi (4507) Bids for Torii Pharma (4551) – Split Price Deal on Weak Transparency

By Travis Lundy, Quiddity Advisors

  • Today after the close, Shionogi & Co (4507 JP) and Torii Pharmaceutical (4551 JP) announced an agreed deal whereby Shionogi would launch a Tender Offer to take over Torii.
  • Torii Pharmaceutical shares rallied sharply after earnings so the actual TOB Price of ¥6,350/share is not a particularly high premium vs undisturbed. Valuation transparency is limited. Synergies are not included.
  • But the price is an ATH, the company is heavily de-levered (so a 23% premium to undisturbed is decent) and the minimum threshold is not high.

10. A/H Premium Tracker (To 2 May 2025):  AH Premia Fall Small; Spread Torsion Provides Continued Alpha

By Travis Lundy, Quiddity Advisors

  • A quiet week as most indices – HK and mainland – saw performance hover around zero for the three days both were open at the start of the week. 
  • For a couple of months I’ve thought warning signs were flashing and spreads could widen. Widening has paused. I am not comfortable it will remain paused or Hs will outperform.
  • The Quiddity Portfolio is pretty hunkered down and nearly flat H/A risk. But benefits from spread torsion (wider spreads coming in, small premia widening). Alpha good again this week.
May 04
0

Weekly Top Ten Event-Driven and Index Rebalance – May 4, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Toyota Industries (6201) – SURPRISE! It’s a TOYODA Takeover Proposal (Good Governance May Not Win)

By Travis Lundy, Quiddity Advisors

  • On Friday after the close, media reports surfaced that Toyota Motor (7203 JP) Group chairman and founding family member had put forth a take-private proposal to Toyota Industries (6201 JP). 
  • The number quoted was ¥6trln market cap (most) or EV (FT), financed by personal funds, 3 megabanks, and reportedly some group companies. 
  • ¥6trln market cap would be +50%. ¥6trln EV +16%. Simultaneously shocking but somehow not surprising. Opportunistic, and surprisingly elegant as a family/group/cultural solution. More below.

2. Toyota Industries (6201) – Thinking About How To Value a ¥6trln Bid

By Travis Lundy, Quiddity Advisors

  • Toyota Industries is a relatively complicated business. It owns lots of shares of Toyota and other companies. It has a financing business, and runs ¥500+bn of EBITDA.
  • As of 31 March 2025, the “Enterprise Value” of the Operating and Financing Business together was about ¥2.2trln. The “Asset Ownership Business” was at ¥2.8trln (1yr ago it was ¥4trln).
  • If you think buying the Operating Business at 6x EBITDA is appropriate, that means the Asset Ownership Business block buy gets done at 31-March-2025 prices. Worth thinking about.

3. Toyota Industries (6201 JP): A Rumoured Privatisation with Several Unknowns

By Arun George, Global Equity Research Ltd

  • Toyota Industries (6201 JP) shares were set to hit the daily upper limit of JPY16,225 due to press reports of a privatisation bid valuing it at JPY6 trillion. 
  • Toyota Industries confirmed receiving a going-private proposal from a special purpose company, while Toyota Motor (7203 JP) said it is considering all possibilities, including a partial investment. 
  • There are still several unknowns, including the price, the identity of the offeror, potential irrevocable commitments, the financing structure, and the timeline. 

4. Hanwha Ocean (042660 KS) Placement: Index Implications; Stock Appears Wildly Overvalued

By Brian Freitas, Periscope Analytics

  • Korea Development Bank is looking to sell 13m shares of Hanwha Ocean (042660 KS). That is US$740m at the top end of the marketed range and 4x ADV. 
  • Following the sale, Korea Development Bank will still own over 15% of the company and that will be an overhang for the stock. Plus the stock appears wildly overvalued.
  • There will be limited buying from passive trackers at the time of the placement with bigger passive flows coming through in June and August.

5. Ather Energy IPO: Expensive and No Immediate Index Inclusion

By Brian Freitas, Periscope Analytics

  • Ather Energy is looking to raise INR 30bn (US$349m) in its IPO, valuing the company at INR 120bn (US$1.4bn). The company appears to be expensive compared to peers.
  • Ather Energy could be added to one global smallcap index in August/November and to another in December/March. Small Cap classification for AMFI and no major local index inclusion.
  • The continued selloff in Ola Electric will give investors pause, especially given Ather Energy‘s stagnant market share and continued losses. There is supply in Ola Electric with PE/VC investors selling. 

6. Shibaura Elec (6957) – Minebea Overbids Yageo’s Overbid of Minebea’s Overbid of Yageo – ¥5,500

By Travis Lundy, Quiddity Advisors

  • A Nikkei article today suggested Minebea Mitsumi (6479 JP) would overbid Yageo’s dramatic 20% overbid of Minebea’s early ¥4,500 overbid of Yageo’s initial ¥4,300 bid for Shibaura Electronics (6957 JP). 
  • Now the news is out. MinebeaMitsumi has bid ¥5,500. Shibaura Electronics has endorsed. This is bang-in-line with the expected path. The question is now YAGEO’s overbid, expected 7 May.
  • If I were YAGEO, I would wait for Shibaura’s earnings a couple of days later, then overbid by ¥100-150 and go for 35 days. There’s optionality there.

7. Poon’s Underpriced Takeover. Minorities Deserve Better

By David Blennerhassett, Quiddity Advisors

  • Dickson Concepts (113 HK) (DC)’s Chairman, Dickson Poon (& relatives), holding 61.98%, have tabled an Offer by way of a Scheme for shares not held, at HK$7.20/share (best & final).
  • That compares to DC’s net cash (as at 30 Sept 2024) of HK$7.44/share. Plus financial assets comprise an additional ~HK$2.16/share. 
  • The IFA will cite liquidity and DC’s historical discount to NAV, and opine “reasonable”, and perhaps even “fair”. It is neither. Minorities should vote this down. But probably won’t …

8. Merger Arb Mondays (28 Apr) – Seven & I, Shibaura, Makino, Bright Smart, ENN Energy, Tam Jai

By Arun George, Global Equity Research Ltd

9. Meilan Airport (357 HK): Possible Unconditional MGO at HK$10.62

By Arun George, Global Equity Research Ltd

  • Haikou Meilan International Airport Company entered an SPA with Hainan Island Construction (600515 CH) to sell its Hainan Meilan International Airport (357 HK) 50.19% stake at RMB9.85 per share (HK$10.62).
  • The SPA completion requires several regulatory approvals, which are low-risk, particularly as Hainan SASAC is the largest shareholder of the offeror and the seller.
  • Under Rule 26.1 of the Takeovers Code, upon completion, the offeror will be required to make an unconditional mandatory cash offer at HK$10.62 per share. The MGO price is final.  

10. Dickson Concepts (113 HK): Sir Poon’s Scheme Offer Below Net Cash

By Arun George, Global Equity Research Ltd

  • Dickson Concepts Intl (113 HK) disclosed a Bermuda scheme offer from the controlling shareholder (Sir Poon) at HK$7.20, a 50.6% premium to the last close price.  
  • The offer is final. While the offer represents an all-time high and is attractive compared to historical trading ranges, it is below net cash. 
  • No disinterested shareholder holds a blocking stake, and retail seems supportive (lowering the risk of the headcount test). The offer, while light, will likely succeed.  
Apr 27
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 27, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Zomato/Eternal: Lower Foreign Ownership Limits & The BIG Passive Selling

By Brian Freitas, Periscope Analytics

  • Zomato (ZOMATO IN), now Eternal, listed in July 2021 with a Foreign Ownership Limit (FOL) of 100%. Since listing, foreign ownership has dropped from over 70% to just under 45%.
  • Eternal is looking to cap foreign ownership at 49.5% to continue qualifying as an Indian-Owned-and-Controlled Company. That will give the company greater operational flexibility, especially for inventory ownership.
  • The FOL decrease will result in selling from passive global index trackers. With the stock 23.5% off its highs and a steady increase in futures open interest, covering could ensue.

2. Swiggy (SWIGGY IN): US$7.6bn Lock-Up Expiry & Index Inclusion

By Brian Freitas, Periscope Analytics

  • Swiggy (SWIGGY IN) listed in November 2024 and around 85% of the shares outstanding (US$7.6bn) will unlock on 13 May.
  • Nearly 80% of the shares that unlock are held by pre-IPO PE/VC investors and they are 100% in the money in most cases. Expect the selldown to commence soon.
  • Swiggy (SWIGGY IN) should be added to one global index in June, while inclusion in the other global index will require a small price increase or selling from PE/VC investors.

3. Merger Arb Mondays (21 Apr) – ENN Energy, Canvest, OneConnect, Makino, Shibaura, Welcia, Topcon

By Arun George, Global Equity Research Ltd

4. StubWorld: GMO Internet (4784) Will Be Squeezy. Until It’s Not.

By David Blennerhassett, Quiddity Advisors

  • Negligible float, 150x+ forward earnings – yes, investors can afford NOT to have GMO Internet (4784 JP) in their portfolio.
  • Preceding my comments on the GMO group are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

5. Poon Moves On Dickson Concepts (113 HK)’s Cash Hoard?

By David Blennerhassett, Quiddity Advisors

  • Dickson Concepts Intl (113 HK) (DC), which is principally engaged in the sale of luxury goods business, is suspended pursuant to the Takeovers Code.
  • DC’s Chairman, Dickson Poon (& spouse), hold 60.5%. Super-net-cash rich DC is trading in sync with historical metrics. 1H25 (Mar Y/E) net profit dropped 40.1%. Shares are roughly flat yoy. 
  • Given DC’s cash hoard, taking the company private makes sense. I doubt Poon is seeking to exit his stake.

6. *NEW* USTR Section 301 Proposed Actions on China Maritime Dominance

By Travis Lundy, Quiddity Advisors

  • Biden’s USTR came out with a flawed Section 301 report on Chinese maritime “dominance” in January. It is not that China shipbuilding is not dominant, but the report was flawed.
  • In February/March (flawed) measures were proposed. Then mostly minimally-insightful hearings were held. Then Trump came out with an Executive Order “Restoring America’s Maritime Dominance” (that requires looking back 80yrs). 
  • Now we have new USTR Proposed Measures which water down the old ones quite considerably.

7. JAFCO (8595) Good Results, Higher Div, Buyback, More Plans; Not Quite There, But Maybe Will Be Later

By Travis Lundy, Quiddity Advisors

  • At noon today, Jafco Co Ltd (8595 JP) announced full year (to March 2025) results. Revenues were up 21.4% this year, OP +49.7%, and Net Income +27.8%.
  • The company announced a ¥5bn buyback, and also announced a new dividend policy of 6% DOE or 50% payout ratio. As it is a markets business, there is no guidance. 
  • The stock popped significantly in the PM session, but the market zeitgeist is a tailwind. And there is supportive new news.

8. Mayne Pharma (MYX AU): This Is A Buy

By David Blennerhassett, Quiddity Advisors

  • On the 21st Feb 2025, Mayne Pharma (MYX AU), a leader in dermatology and women’s health, entered into a Scheme Implementation Deed with US-based pharmaceutical outfit, Cosette Pharmaceuticals.
  • Cosette is offering A$7.40/share, a 37% premium to last close. The Offer has the backing of Mayne’s two largest shareholder, Viburnum and Bruce Mathieson, collectively holding 14.1%.
  • Mayne has now revised the Scheme timeline, with completion targeted late June, early July. This is done. 

9. Fujitsu (6702) – Earnings/Guidance OK, Margins Better, But New Quiddity Buyback Data Tool 🥳

By Travis Lundy, Quiddity Advisors

  • Fujitsu Earnings. Revenues +2.1%, OP +77.5%, Pretax +65.1%, Net -13.0% (basis effect from FY23 one-offs). Forecast? Revs -2.8%, OP/adj +35.8%/+17.2%, Net/adj +77.4%/+3.7%. All guided measures shy vs the Street consensus.
  • The company presented a progress update on its Medium-Term Management Plan. Core profits are better. Things are improving. 
  • The company also announced a big 11-month ¥170bn buyback. Last year’s was ¥180bn (completed 24 March). Worth checking out the details (and our brand-new buyback tool)

10. Korea Dems’ Surprise Proposal: Separate Tax for Dividends Over 35% Payout

By Sanghyun Park, Clepsydra Capital

  • The bill submitted by the Democratic Party today highlights that separate taxation on dividend income applies only to dividends from companies with a 35% payout ratio or higher.
  • We might see re-rating on dividend stocks with solid cash flow but below 35%, especially banks over telcos. Holdcos like Samsung C&T, LG, and Hyundai Glovis could attract attention too.
  • Dark horses like NAVER, with earnings potential, and Samsung Electronics, currently at 25%, could attract attention if they increase payouts to 35%.
Apr 20
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 20, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. What if China ADRs Are Delisted from US Exchanges?

By Brian Freitas, Periscope Analytics

  • We see 281 Chinese companies listed on U.S Stock Exchanges with a total market cap of US$869bn. 32 of these companies are listed on the HKEX (388 HK). 
  • If the rumours of Chinese stocks being delisted from U.S. Exchanges gathers steam, we could see a wave of secondary listings in Hong Kong.
  • PDD Holdings, Full Truck Alliance, Vipshop Holdings, TAL Education and ZEEKR are the largest China ADRs with no HK listing and could come under pressure.

2. Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX

By Brian Freitas, Periscope Analytics

  • Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to raise US$1.2bn by offloading their entire stakes in Suzuki Motor by way of a secondary offering.
  • Suzuki Motor (7269 JP) stock is flat since the announcement of the placement but has underperformed its peers and the TSE Tokyo Price Index TOPIX (TPX INDEX). 
  • With the placement being less than 5% of the number of shares outstanding, there is unlikely to be any immediate passive inflow which could pressure the stock.

3. The Skew in the Tsuruha-Welcia-Aeon Combination

By Travis Lundy, Quiddity Advisors

  • Tsuruha Holdings (3391 JP), Welcia Holdings (3141 JP), and Aeon Co Ltd (8267 JP) announced their deal whereby Tsuruha merges with Welcia in December, and Aeon gains control of MERGECO.
  • Orbis Investments – owner of 9.7% of shares out – complained. I think with good reason. Tsuruha is trading a little expensive to the ratio, but there’s 7.5mos to go. 
  • Interestingly, there’s real skew on this trade. It’s not overly complicated, and it is worthwhile thinking about it.

4. “Tiny Win for Guess The Ratio” Aeon (8267) Pays a SMALL Premium for Aeon Mall (8905)

By Travis Lundy, Quiddity Advisors

  • In an announcement after the close Friday 11 April, Aeon Co Ltd (8267 JP) and AEON Mall (8905 JP) announced their merger ratio, and timing. 
  • The ratio is 0.65 to 1.0, meaning Aeon Mall shareholders don’t get a lot of credit for their real estate. The timing is short-dated. The AGM is end-May. Merger July1. 
  • This may be a tad light, but it is a done deal. Active shareholder base is almost all retail and crossholders+dom passive gets Aeon to 70%. 

5. Chagee Holdings (CHA US) IPO: Global Index Inclusion Timeline

By Brian Freitas, Periscope Analytics

  • Chagee Holdings (CHA US) is looking to raise up to US$473m in its IPO, valuing the company at up to US$5.2bn. The offering is expected to price today, list tomorrow.
  • Media reports indicate that cornerstone investors have indicated demand for US$205m of the offering. There is no mention of a lock-up on those investors yet.
  • The stock could be added in one global index in August (with a higher probability of inclusion in November), while inclusion in the other global index is likely in December.

6. FSS Bans Arb in Local MM Books: Identifying Opportunities from Short-Term Inefficiencies

By Sanghyun Park, Clepsydra Capital

  • The FSS is banning arb trades under the MM book, requiring separate books for any arb positions to keep them distinct from MM flow.
  • Most local shops lack the resources to set up a separate arb desk. Splitting teams, creating new workflows, and hiring extra staff isn’t feasible given their tight P&L.
  • Building a tracker for MM dropouts could spot dislocations, as the crackdown creates short-term inefficiencies—if we’re dialed in, there’s alpha to be made.

7. Aeon Mall (8905 JP): Aeon (8267 JP)’s Share Exchange Ratio Is Set

By Arun George, Global Equity Research Ltd

  • AEON Mall (8905 JP) announced a share exchange offer by Aeon Co Ltd (8267 JP) at 0.65 Aeon shares per Aeon Mall share, a 30.9% premium to the undisturbed price.
  • The share exchange ratio is reasonable compared to historical price ratios and IFA valuation ranges. The implied offer multiple is attractive compared to peer multiples.
  • Aeon’s 58.16% shareholding ensures that Aeon Mall’s vote on 22 May is low-risk. The share exchange’s effective date is 1 July.

8. TKP Corp (3479) – A Second Big Buyback In Short Order

By Travis Lundy, Quiddity Advisors

  • TKP Corporation (3479 JP) is a fascinating little company. It rents space. From people. To people. Then adds on services. Meeting, recruiting, training, seminar, banquet, party, etc rooms.
  • Last year they bought control of two small businesses to add features. Revenues are up. The new FY suggests revenue growth, OP growth, and now a buyback.
  • The buyback is the interesting bit. They did one last FY with interesting parameters, and Quiddity has a new tool we are trying out, so we showcase an example here.

9. Yageo Bigly Overbids Minebea (+20%) For Shibaura Elec (6957) At ¥5400

By Travis Lundy, Quiddity Advisors

  • In February Yageo Corporation (2327 TT) made an unsolicited bid for Shibaura Electronics (6957 JP) at ¥4,300/share after getting the cold shoulder for months.
  • Minebea Mitsumi (6479 JP) was asked to bid, and they did a week ago, bidding ¥4,500/share. Yesterday the Shibaura CEO was in an article saying an overbid would be considered. 
  • Mid-Day, I boomeranged my piece, saying I thought Yageo would overbid. Today after the close, Yageo has overbid with a whopping ¥5,400/share bid, with unchanged start date of 7 May.

10. [Japan Activism] – ValueAct Agrees to Tender to KKR Topcon (7732) Tender and Join As Buyer

By Travis Lundy, Quiddity Advisors

  • Last night, Topcon Corp (7732 JP) announced that KKR had agreed a deal with ValueAct Capital who owns 14.62% of Topcon to have VAC tender shares and invest in Bidco.
  • Topcon’s Special Committee saw nothing wrong with this in terms of fairness. I think that argument needs to be investigated at a broader level. 
  • If Bidder wants 50.1% control and expects passive to agree, and Bidder gets 50.1% to join Bidco at terms, obviously, majority of minority disappears. This is an unintended loophole. 
Apr 13
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 13, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Minebea Mitsumi Overbids Yageo for Shibaura Electronics (6957)

By Travis Lundy, Quiddity Advisors

  • In early February, Yageo Corporation (2327 TT) made an unsolicited bid for Shibaura Electronics (6957 JP) at ¥4,300/share. They had approached in October 2024, and continued approaches through end-January.
  • Shibaura’s bankers approached Minebea Mitsumi (6479 JP) in January. Due diligence, then bids. They bid ¥4,600. Not enough said the SC. Then Trump. Then ¥4,400. Now ¥4,500 accepted 9 April.
  • But Trump tariffs relief came 9 April US time. And the Offer Price is below the mid-point of ALL three different financial advisors. I think this is not done yet.

2. Aussie Arbs: Trump Tariffs And MACs

By David Blennerhassett, Quiddity Advisors

  • Travis Lundy succinctly summarised the Trump Tariffs in Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated. Do read his note.
  • From an arb standpoint, most (all?) NBIOs will likely see a downward revision in pricing. Vote risk should also be reduced.
  • Such tariffs on predominantly domestic businesses should not trigger material adverse changes (MACs) Down Under. But it is still a worthwhile project to dig a little deeper.  

3. HK Merger Arb: Opportunities Amidst the Market Selloff

By Arun George, Global Equity Research Ltd

  • The gross spreads of large HK merger arb situations have increased due to the unfortunate fallout from Trump’s trade war. The HSI closed down 13.2%.
  • We assess the widening spreads of HK’s merger arb situations based on offer structure, preconditions, conditions, and other factors.
  • The deals, ranked in terms of increasing deal risk, are Tam Jai, Soundwill, Vesync, Goldlion, Canvest, ESR, OneConnect, HKBN, and ENN Energy.

4. 7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback

By Travis Lundy, Quiddity Advisors

  • Today, Seven & I Holdings (3382 JP) reported full-year earnings. The FY2025 guidance looks OK. Not overly exciting. Optically, it falls short, but 7&i guidance includes York only for H1. 
  • The basic outlines of strategy in the Presentation are unchanged from the 6 March strategy report. The company seems convinced an IPO of SEI is a good thing. I’m underwhelmed.
  • The company also announced that it would bring forward ¥600bn of its planned 6-year ¥2trln buyback program, and execute it this year. That’s good. 

5. China ETF Inflows & Implications: Central Huijin’s Huge Buying

By Brian Freitas, Periscope Analytics

  • Nearly US$22bn has flowed into mainland China listed ETFs over the last 3 trading days, reversing outflows that started in mid February.
  • Central Huijin has announced that it will be increasing its ETF holdings to maintain smooth operation of China’s capital markets. The rest of the National Team will be buying too.
  • There are multiple implications of the huge ETF creations in a short time frame and a reversal of flows will lead to a reversion in a bunch of trades.

6. Suzuki Motor (7269 JP) Placement: Limited Index Buying & Weak Markets Could Pressure Stock

By Brian Freitas, Periscope Analytics

  • Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to offload their entire stakes in Suzuki Motor (7269 JP) by way of a secondary offering.
  • With the size of the secondary offering less than 5% of the number of shares, there could be no index buying in the short-term and that will pressure the stock.
  • If the overallotment option is exercised and the seller of the shares is currently considered as non-float, there could be small passive buying in the short-term.

7. Hong Kong Arbs: (Largely) Immune From Trump Tariffs

By David Blennerhassett, Quiddity Advisors

  • In Aussie Arbs: Trump Tariffs And MACs, I ran a ruler over the fifteen live deals Down Under, and how they may be affected by the Trump Tariffs.
  • This insight canvasses the ongoing Hong Kong arbs and wording surrounding material adverse changes (MACs). Hong Kong MACs are typically less onerous, and lack specificity, versus Aussie arbs.
  • Although the framework exists for an Offeror to enforce a MAC, I’m not aware of any evidence of this occurring under Hong Kong’s Takeovers Code.

8. Korea Short Selling: Biggest Changes in Shorts & Trade Performance

By Brian Freitas, Periscope Analytics

  • The resumption of short selling in Korea came at a good time for investors, giving them some additional tools to manage market volatility.
  • Short interest has increased from 0.17% to 0.23% of market cap for the KOSPI market and from 0.46% to 0.63% for the KOSDAR market.
  • The KOSPI/KOSDAQ ratio has reverted a bit on profit taking, and the forecast index deletions have recovered a bit but should continue to see increase short interest.

9. MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm

By Travis Lundy, Quiddity Advisors

10. Abacus Storage King (ASK AU) Gets an NBIO from Ki Corp & PSA

By Brian Freitas, Periscope Analytics

  • Abacus Storage King (ASK AU) was demerged from Abacus Property Group in 2023 and the stock has traded in a range since listing.
  • Now, Ki Corp and Public Storage (PSA US) have made a conditional and non-binding proposal to take Abacus Storage King (ASK AU) private at A$1.47/share.
  • The offer is a 27% premium to the last close of the stock and is higher than the price that the stock has traded at since listing.
Apr 06
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 6, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated

By Travis Lundy, Quiddity Advisors

  • For weeks, if not months, the world has been wondering what the “reciprocal tariffs” would be, and what the logic would be behind them.
  • There is talk of VAT, and NTBs, and huge tariff step-ups after quotas are exceeded (US exports of milk and cheese to Canada – high tariffs, but quotas not exceeded).
  • But a quick check of the math on the Trump Executive Order and Annex I tells you the logic is different than what everyone expected. 

2. BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion

By Brian Freitas, Periscope Analytics

3. Korea Short Selling: Off to the Races

By Brian Freitas, Periscope Analytics

  • Short selling in Korea resumes in a couple of hours. Expect heightened volatility for a few days before things settle down.
  • Foreign investors have increased their holdings over the last five weeks and there could be further buying in select stocks on stock price drops.
  • The KOSPI 200 INDEX has outperformed the KOSDAQ 150 Index, and the forecast index deletes have underperformed the indices indicating that there will be positioning for the short-sell resumption.

4. Korea Short Selling: What Happened on Day 1?

By Brian Freitas, Periscope Analytics

5. T&D Holdings (8795) – A Really Good Look (Divs Up, Big Buyback, Good Historical Stats)

By Travis Lundy, Quiddity Advisors

  • Yesterday, post-close, T&D Holdings (8795 JP)  announced ¥40 for 31-Mar-25 FY-end dividend (¥80/yr) and ¥120/share/year in the year to March 2026 on a higher planned payout ratio.
  • The company also announced guidance for Adjusted Profit for 2025 at ¥130bn (up), and guidance for March 2026 at ¥140bn (lower growth than this past year). 
  • They announced the current ¥50bn buyback was 87.5% complete (they have until 13 May to complete) and a new buyback starting 19 May to spend up to ¥100bn over 10.5mos.

6. [Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share

By Travis Lundy, Quiddity Advisors

  • The difference between an LBO (Leveraged Buy Out) and an MBO (Management Buy Out) is that an MBO is usually just an LBO where the buyers don’t replace the CEO.
  • After 4+mos  of speculation/noise since a Bloomberg article said Topcon was weighing takeover bids, we have a deal. KKR and JIC will buy out Topcon in an “MBO” at ¥3,300/share.
  • Unusually, the lower limit is 50.1%. This is an OK exit for the “Bad Cops” but not a great one. It should be higher. Start delayed for 4 months.

7. Nikkei 225 Sep25 Rebal: One ADD, One DELETE Still Probable Unless Kokusai Elec (6525) Offering/Split

By Travis Lundy, Quiddity Advisors

  • The March 2025 Nikkei 225 review came out with a sparse set of changes. That gives us hints for the September 2025 review.
  • Kokusai did NOT get added, waiting for a split, an offering, or time to pass. Only one sector change was made. So we see One ADD and One DELETE.
  • The lack of effort to address sector imbalances within the rules suggests the rules are not as hard as people thought. Intra-review changes could be more interesting in years ahead.

8. ENN Energy (2688 HK): This Is An Avoid

By David Blennerhassett, Quiddity Advisors

  • Back on the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH), its largest shareholder.
  • Investors hoping for a clean (er) exit, or one where the back-end terms were clearly defined, will be disappointed. And minorities are active in this name.
  • The Offer pivots on where the newly-listed H-shares trade. The IFA’s assessment on the theoretical value of these H-shares is unrealistic. 

9. Shin Kong (2888 TT)/Taishin (2887 TT) Deal Gets FSC Approval – Still A Good Swap

By Travis Lundy, Quiddity Advisors

  • Late Monday, The Financial Supervisory Commission approved the merger where Shin Kong Financial Holding (2888 TT) is to be absorbed by Taishin Financial Holding (2887 TT). Announcement here.
  • Yesterday, the chairmen of both Shin Kong and Taishin decided the merger base date, which has been set a bit further out than even I expected, at 24 July 2025.
  • The terms tightened yesterday. There is still a worthwhile switch to be done (or arb if you have cheap borrow), and NEWCO is cheap to peers, STILL.

10. Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road

By Arun George, Global Equity Research Ltd

Mar 30
0

Weekly Top Ten Event-Driven and Index Rebalance – Mar 30, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Xiaomi (1810 HK)’s US$5bn Placement: Unfavourable Index Dynamics but Strong Momentum

By Brian Freitas, Periscope Analytics

  • Xiaomi Corp (1810 HK) is looking to place 750m shares at a price range of HK$52.8-54.6/share, a 4.2-7.4% discount from last. That could raise up to HK$40.95bn (US$5.27bn).
  • There will be limited passive buying near-term. There will be more passive buying at the end of May. Then there will be passive selling early June.
  • Shorts will be hurting from the relentless move higher in the stock and there could be short covering if the stock moves lower from these levels.

2. ENN Energy (2688 HK) Privatization: Details & Index Implications

By Brian Freitas, Periscope Analytics

3. Shinko Electric (6967) – Chicken and Logistics

By Travis Lundy, Quiddity Advisors

  • The Tender Offer closed end of last week. The bidder JICC-04 got 59.281mm shares. Most of what was left over – perhaps even more than 100%, was passive-owned.
  • More than 100%? How does that work? It works because of how the logistics goes. 
  • And right now, the reason why the stock is trading well through terms is a matter of Chicken and Logistics.

4. Sun Corp (6736) – Still Cheap

By Travis Lundy, Quiddity Advisors

  • Eight months on from the Tender Offer which changed the shape of the shareholder register, Sun Corp (6736 JP) is as cheap to its main asset as it was before.
  • Sun Corp is cheap to its holding in Cellebrite DI (CLBT US). How cheap depends on the form and structure of its eventual exit. 
  • Understanding what the options are (and the dynamics around hedging/exposure) is worthwhile.

5. ENN Energy (2688 HK): ENN Natural Gas’ Preconditional Cash/Scrip Offer

By Arun George, Global Equity Research Ltd

  • ENN Energy (2688 HK) announced a pre-conditional privatisation from ENN Natural Gas (600803 CH)/ENN-NG comprising HK$24.50 cash per share + 2.9427 ENN-NG H Shares per ENN share.
  • The appraised offer value is HK$80.00 (HK$82.35, including the 2024 dividend), which is a tad optimistic. My calculations suggest a realistic offer value range of HK$71.47-76.32. 
  • The offer is final. The precondition satisfaction is low-risk. A high AGM minority participation is a risk, but the scheme vote should pass as the offer terms are reasonable.   

6. Seven & I Holdings (3382 JP): Uncomfortable Truths

By Arun George, Global Equity Research Ltd

  • Seven & I Holdings (3382 JP) has published two documents to respond to misinformation and detail its “constructive engagement” with Alimentation Couche-Tard (ATD CN).
  • The statements underscore the Board’s serious doubts about securing US antitrust approval. The significant discrepancies in the engagement timeline point to two parties at loggerheads. 
  • While the Board claims it is pursuing a dual-track process to create value, the reality is that the process is designed to hinder Couche-Tard’s offer to facilitate the restructuring plan.

7. Tokyu Corp (9005) To Lift Stake in Tokyu REIT (8957) Again – Bigger Than You Think It Is

By Travis Lundy, Quiddity Advisors

  • Today, Tokyu Corp (9005 JP) announced it would increase its stake its family REIT, buying up to 48,880 units or 5.0% of units out over the next six months.
  • This comes a couple of days after Hankyu Hanshin announced the same for its REIT, discussed here. Others have done so before. Tokyu has. Others will do so going forward. 
  • The main reason? Squeeze the ‘share’ price higher. Get the REIT to 1.0x PNAV then stuff it with sponsor-held properties. That’s not bad. The goal is a higher price.

8. 7&I (3382) – Clarifications of Clarifications But Progress Is Apparent

By Travis Lundy, Quiddity Advisors

  • On 10 March, Seven & I Holdings (3382 JP) released a statement about its interactions with Alimentation Couche-Tard (ATD CN). The next day, ATD released its own. They didn’t match. 
  • The 7&i spokesperson admitted one technical point, but investors seemed to believe ATD over 7&i. On 13 March, ATD held a presentation in Tokyo. Materials? Unchanged. Earnings comments? Unchanged.
  • This morning, 7&i released a document which “corrects the record regarding critical false and misleading claims about 7&i’s engagement with Alimentation Couche-Tard (ACT).” OUCH. The stock fell.

9. Fuji Soft (9749 JP) – KKR Does Deal With the Family To Squeeze Out Minorities – You Can Join Too

By Travis Lundy, Quiddity Advisors

  • KKR’s Second Tender Offer for Fuji Soft Inc (9749 JP) ended 19 February 2025 and KKR got a whopping 57.9% after Bain bowed out. It was close.
  • The Nozawa founder said it would not tender. Others family members may have, but now KKR has signed a deal with Nozawa family company YK NFC, to support the squeezeout.
  • Assuming, Nozawa Hiroshi’s stake and the NFC stake remain unchanged, that cements the result of the 25 April AGM. But there may be games to play.

10. Tinycap Cash-Rich Cookpad (2193) With HUGE Buyback. AGAIN

By Travis Lundy, Quiddity Advisors

  • Hugely cash-rich Cookpad Inc (2193 JP) wouldn’t hit my radar except for two things. 1) it was the target of Melco Holdings (6676 JP) chairman Maki-san a few years ago…
  • And 2) they did a huge buyback last year which pumped up the stock very bigly. 
  • Maki-San appears long gone from the shares, but now they are doing another big buyback. Just as bigly. But there are new nuances this year.