In today’s briefing:
- Barito Renewables Energy (BREN IJ): Global Index Inclusion Likely This Month
- Tam Jai (2217 HK) Suspended: Expect Toridoll (3397 JP) To Make An Offer
- Fuji Soft (9749 JP): Nearing the Endgame as KKR Bumps to JPY9,850
- Proto Corp (4298) – MBO After Restatement Scandal Is Opportunistic at ¥2,100 (+64%)
- Korea: 11 Potential Index Deletions in February
- Tecnos Japan (3666 JP): Ant Capital’s JPY1,155 Tender Offer
- Tohto Suisan (8038 JP): Aso’s Unusual Tender Offer
- Tecnos Japan (3666 JP) – Small Cap IT Consultant Goes Private – Activist Pitches In
- Proto Corp (4298 JP): MBO Tender Offer Represents an All-Time High
- Ola Electric IPO Lockup – US$1.6bn+ Lockup Release
Barito Renewables Energy (BREN IJ): Global Index Inclusion Likely This Month
- Barito Renewables Energy (BREN IJ) stock has gone through a series of gyrations as index inclusion was announced and then retracted due to the concentrated holding of the stock.
- With pre-IPO PE/VC investors selling some stock, the increase in float could result in the inclusion of Barito Renewables Energy (BREN IJ) in a global index later this month.
- The inclusion of the stock in the index will require passive trackers to buy just over 400m shares of the stock. That is over 14x ADV and will be impactful.
Tam Jai (2217 HK) Suspended: Expect Toridoll (3397 JP) To Make An Offer
- Tam Jai International (2217 HK), an operator of Asia noodle specialty restaurants, is currently suspended pursuant to the Takeovers Code.
- On the 13th November 2024, Tam Jai announced 1H25 net profit – to 30th September 2024 – declined 55.8% yoy to HK$36.1mn, its lowest six-month tally since listing.
- Toridoll Holdings Corporation (3397 JP) controls 74.61% of Tam Jai. Expect a Scheme to unfold. An Offer price around HK$1.50/share would be welcome. That’s probably a stretch.
Fuji Soft (9749 JP): Nearing the Endgame as KKR Bumps to JPY9,850
- KKR & Co (KKR US) has increased its Fuji Soft Inc (9749 JP) offer to JPY9,850, a 4.2% premium to the previous JPY9,451 offer and a 2.6% premium to Bain’s JPY9,600 offer.
- A bump from KKR was expected and necessary, as the shares have consistently traded above its previous offer. Bain is scheduled to launch its competing offer this week.
- Expect a final round of bids, as KKR’s offer is not final. The shares closed above KKR’s offer, which remains below the high end of the IFA DCF valuation range.
Proto Corp (4298) – MBO After Restatement Scandal Is Opportunistic at ¥2,100 (+64%)
- Proto Corp (4298 JP) is not the name on people’s lips, but everyone who knows cars in Japan knows this company. They have run car mags for decades.
- Now they do other things too but car magazines, websites, and associated data provision are worth 90% of OP. And they are ubiquitous, and growth has been good.
- Management forecasts for growth are a damp squib. This is opportunistic.
Korea: 11 Potential Index Deletions in February
- There are 11 stocks (maybe 12) in Korea that could be deleted from a global index in February and that will result in large selling from passive trackers.
- With announcement in a week and implementation in just over 3 weeks, there is positioning in a lot of the names.
- With short selling still banned, positioning will not be as high as the passive selling and the stocks could still drop over the next few weeks.
Tecnos Japan (3666 JP): Ant Capital’s JPY1,155 Tender Offer
- Tecnos Japan (3666 JP) has recommended a tender offer from Ant Capital at JPY1,155, a 38.7% premium to the last close.
- The offer is reasonable as it is above the midpoint of the target IFA’s DCF valuation range and represents a seven-year high.
- Ant has secured irrevocables from the top three shareholders. However, the largest shareholder’s irrevocable has a counteroffer and share price clause, which could result in a competing bid.
Tohto Suisan (8038 JP): Aso’s Unusual Tender Offer
- Tohto Suisan (8038 JP)‘s tender offer from Aso Corp is JPY7,500, a 39.1% premium to the last close. Tohto Suisan is currently in breach of the tradable share ratio.
- Unusually, the offer has no lower or upper limit. If the required ownership ratio is secured, Aso will implement squeeze-out procedures.
- While supportive, the Board has left the decision to accept or reject the offer at the shareholders’ discretion. The offer is attractive and represents an all-time high.
Tecnos Japan (3666 JP) – Small Cap IT Consultant Goes Private – Activist Pitches In
- Tecnos Japan (3666 JP) decided it wanted to go private. It has a bunch of large shareholders and a lot of retail, and was getting kicked out of TOPIX.
- An activist bought 6% last spring, Tecnos conducted a bidding process last fall. Ant Capital won. The activist has 10+% now. They and two others with 25% agreed to tender.
- This should get done easily. It is not expensive, but an auction is good process and should be a model for deals done in future.
Proto Corp (4298 JP): MBO Tender Offer Represents an All-Time High
- Proto Corp (4298 JP) has recommended an MBO tender offer at JPY2,100, a 64.1% premium to the last close.
- The offer is attractive as it is above the midpoint of the target IFA’s DCF valuation range and 25% above the all-time high.
- Despite the presence of two substantial shareholders, an attractive offer suggests that this is a done deal. The tender offer ends on 21 March, with payment on 28 March
Ola Electric IPO Lockup – US$1.6bn+ Lockup Release
- Ola Electric (OLAELEC IN) raised around US$734m in its India IPO in August 2024. The lockup for its pre-IPO investors is set to expire soon.
- Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells
- In this note, we will talk about the lockup dynamics and possible placement.
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