In today’s briefing:
- Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback
- Names to Watch for Inclusion in MSCI Korea May Review
- Kanematsu Electronics (8096 JP): JPY6,200 Tender Offer from Kanematsu Corporation
- Kanematsu Sustech (7961) ¥2250/Share Tender Offer by Parent – Supremely Illiquid But Interesting
- Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
- Last Week in SPACE: Kawasaki Kisen Kaisha, Osstem, Fujitsu General, Adani Enterprises
- Weekly Deals Digest (29 Jan) – AAG Energy, Acotec, Xingda, Origin Energy, Tyro, Kanematsu, Toyo
- Kanematsu Electronics (8096) – ¥6200/Share Tender Offer by Parent – Easy Takeout
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Osstem, Warrego, Norwest Energy, Acotec, Sabana, Jafco, Toyo
- EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback
- The Adani Group stocks have taken a dive following the Hindenburg Research report. Group market cap is down more than US$47bn with company promoters taking the biggest hit.
- The Adani Enterprises FPO is almost certain to be undersubscribed. MSCI, in an unprecedented step, is monitoring publicly available information and is seeking feedback from the investment community.
- We find that the real float of some Adani Group stocks is much lower than the headline numbers and there could be selling if MSCI lowers the FIF.
Names to Watch for Inclusion in MSCI Korea May Review
- Posco International‘s recent merger with Posco Energy increased the share count. The distance from the float market cap borderline is catchable, given the current share price uptrend.
- Hanwha Aerospace will likely fail inclusion in this February review. The gap with the hurdle is not large, so it can aim for inclusion in the May review.
- Among Outside IMI, Korea Gas is tricky as it is a FOL stock. MSCI-concluded float is 30%, and the gap with the float market cap hurdle is still quite large.
Kanematsu Electronics (8096 JP): JPY6,200 Tender Offer from Kanematsu Corporation
- Kanematsu Electronics (8096 JP) has recommended Kanematsu Corp (8020 JP)’s tender offer of JPY6,200 per share, an 32.9% premium to the undisturbed price (27 January).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
- The tender offer is attractive as it represents an all-time share price high and a premium to peer multiples. This suggests a done deal.
Kanematsu Sustech (7961) ¥2250/Share Tender Offer by Parent – Supremely Illiquid But Interesting
- Kanematsu Corp (8020 JP) announced two tender offers late Friday to take out minorities in subsidiaries. One larger, safer deal. One smaller, illiquid, but potentially interesting one.
- This is the interesting one. It is being done at the wrong price, and it has investors who might care who have been long-time holders.
- This could get interesting. You have a buyer. A target. It’s pretty clean except for shareholder structure. And the buyer has room to pay up.
Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
- The review period for the upcoming rebalance of the MSCI, Nikkei 225, NIFTY, Nifty Next 50, SSE STAR50 and KRX New Deal Indices ends on 31 January.
- The IDX30, LQ45, IDX80, Global X Uranium ETF (URA US) rebalances will be implemented on 31 January while the PSEi Index (PCOMP INDEX) rebalance will be implemented on 3 February.
- There were inflows to Asian country ETFs and iShares MSCI Emerging Markets (EEM), and outflows from IShares MSCI Min Vol EM ETF (EEMV) and iShares MSCI Pacific ex Japan (EPP).
Last Week in SPACE: Kawasaki Kisen Kaisha, Osstem, Fujitsu General, Adani Enterprises
- Be long Kawasaki Kisen Kaisha (9107 JP) vs MOL and NYK. The shares are cheap on a forward basis. KLine is reducing the Real World Float, causing further potential squeeze.
- Sabana Industrial REIT (SSREIT SP)‘s Partial Offer at 0.88x book is not overwhelming, but it is also not a control stake. It is probably priced near-right.
- IF Osstem (048260 KS)‘s price were to go higher, it is conceivable there could be a bump, but don’t bet on it as long as the stock trades <KRW 190,000.
Weekly Deals Digest (29 Jan) – AAG Energy, Acotec, Xingda, Origin Energy, Tyro, Kanematsu, Toyo
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – New Ruipeng Pet Group (RPET US) and Hesai Group file for US$100 million IPOs for listing in the US.
- Event-Driven developments – Aag Energy Holdings (2686 HK), Acotec Scientific Holdings (6669 HK), Xingda International (1899 HK), Kanematsu Electronics (8096 JP), Toyo Construction (1890 JP), Origin Energy (ORG AU).
Kanematsu Electronics (8096) – ¥6200/Share Tender Offer by Parent – Easy Takeout
- Kanematsu Corp (8020 JP) announced two tender offers Friday to take out subsidiaries. One more liquid one. One very small sub. This is the larger, easier deal.
- Kanematsu Electronics is an IT shop, designing and executing system integration and maintenance services. It is a great business. The takeout is a 33% premium to an all-time high.
- It might still be a bit cheap, but it is not egregious, and it would be quite difficult to block.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Osstem, Warrego, Norwest Energy, Acotec, Sabana, Jafco, Toyo
- There are 43 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- One new deal was discussed on Smartkarma in the past week: MBK and Unison Capital MBO-style Tender Offer for Osstem Implant (048260 KS).
- Key updates took place for: Warrego (WGO AU), Norwest Energy NL (NWE AU), Acotec (6669 HK), Sabana Industrial REIT (SSREIT SP), Jafco (8595 JP), and Toyo Construction (1890 JP).
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
- Weekly summary of vol changes and moves across Global Markets
- Analysing ATM volatility and skew changes over the last 5 days
- We suggest a few trades to take advantage of the implied vol surfaces
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