Daily BriefsEvent-Driven

Daily Brief Event-Driven: Meituan Index Flows Clarifications on the Tencent Distribution; Prosus Comments on Its Holdings and more

In today’s briefing:

  • Meituan Index Flows Clarifications on the Tencent Distribution; Prosus Comments on Its Holdings
  • Adani Enterprises – A Record Follow-On Public Offering May Be in the Works
  • Straits Times Index Quiddity Leaderboard Mar 23: SMM Index Treatment Clearer Under New Terms
  • Korea Zinc: Treasury Shares Swap with LG Chem & Hanwha Corp + Treasury Share Sale
  • EQD | TSMC (TSM US): Buffet Is Betting on Long Term Upside – We Look at the Options Market for Ideas
  • Chip Eng Seng (CHIP SP)’s S$0.72 VGO from the Tangs
  • Lygend (2245 HK) IPO: No Index Inclusions Expected
  • MergerTalk:Why Broadcom’s Pursuit of VMware Will Fare Better Than Nvidia’s Doomed Bid For ARM

Meituan Index Flows Clarifications on the Tencent Distribution; Prosus Comments on Its Holdings

By Travis Lundy

  • Days after the Tencent (700 HK) announcement about its planned distribution of the bulk of the Meituan (3690 HK) shares it owns, the Hang Seng Index team clarified index treatment.
  • It will be treated in HS Indices as a “listed non-cash distribution” for Tencent. There is theoretically wiggle room on the Meituan side, but it appears it will follow JD.com.
  • That means Meituan selling on 4 January at the close, limbo for two months, then Meituan buying. Full model below.

Adani Enterprises – A Record Follow-On Public Offering May Be in the Works

By Travis Lundy

  • Adani Enterprises (ADE IN) (“ADL”) on Tuesday announced a Board Meeting for Friday to consider capital raising options. Multiple media sources suggest a record Indian Follow-on Public Offering of INR200bn.
  • The company has bid for/bought multiple assets recently, and proposed investments plan of up to US$150bn in 10yrs in renewables, cement, airports, healthcare to aim at a US$1trln valuation.
  • This will get complicated, interesting, and is not necessarily going to come out well.

Straits Times Index Quiddity Leaderboard Mar 23: SMM Index Treatment Clearer Under New Terms

By Janaghan Jeyakumar, CFA


Korea Zinc: Treasury Shares Swap with LG Chem & Hanwha Corp + Treasury Share Sale

By Douglas Kim

  • On 23 November, Korea Zinc announced that it will swap its treasury shares with LG Chem and Hanwha Corp and sell part of its treasury shares to other investors.
  • Korea Zinc could gain additional dividend payments by exchanging part of its treasury shares with shares of LG Chem and Hanwha Corp. 
  • Potential separation of Young Poong and Korea Zinc between the Choi and Jang families is likely to be an on-going process, although it is difficult to tell the exact timing. 

EQD | TSMC (TSM US): Buffet Is Betting on Long Term Upside – We Look at the Options Market for Ideas

By Simon Harris

  • Stock has suffered this year (-47% YTD) with rising geopolitcal tensions and slowing global economy
  • Berkshire Hathaway is betting on a recovery in the stock with their $4.1bn stake
  • We look at the options market to identify some trades

Chip Eng Seng (CHIP SP)’s S$0.72 VGO from the Tangs

By Arun George

  • Chip Eng Seng Corp (CHIP SP) disclosed a conditional VGO from the Tangs at S$0.720, a 6.7% premium to the undisturbed price (6 September). The price is not declared final. 
  • Irrevocables and family represent 41.44% of outstanding shares. The VGO has a 50%+ minimum acceptance condition which requires around a 15% minorities acceptance rate.
  • While the last close is in line with the offer, it is attractive in the context of historical prices/multiples. Therefore, there is a good chance of hitting the 50% threshold.

Lygend (2245 HK) IPO: No Index Inclusions Expected

By Brian Freitas

  • Media reports indicate that Lygend Resources & Technology (2245 HK) has priced its IPO near the low end of the range at HK$15.80/share and will raise HK$3.67bn (US$470m).
  • Most of the cornerstone investors will be classified as non-float and the stock will not be included in the MSCI or FTSE indices due to low float market cap.
  • Importantly, Lygend Resources & Technology (2245 HK) will not meet the threshold for inclusion in the HSCI which means no inclusion to Southbound Stock Connect and no mainland flows.

MergerTalk:Why Broadcom’s Pursuit of VMware Will Fare Better Than Nvidia’s Doomed Bid For ARM

By Robert Sassoon

  • While the size of the $61BN Broadcom/VMware deal has naturally attracted the scrutiny of regulators, the transaction’s regulatory obstacles are far less  onerous than the failed Nvidia/Arm deal
  • Timing risk is a consideration as we can expect a protracted review process 
  • If the regulatory review timeline  does not stretch too far beyond  the end 2023, there are still decent IRRs to be earned by arbs

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