In today’s briefing:
- ShinKong (2888 TT)/Taishin (2887 TT) – Time To Deal Is Shorter, But Risk To Peers Is Higher
- Gold Road Enters Scheme With Gold Fields
- Rare Arb Opportunity from ATS Breakout in Korea: Day-Night Spread
- HK Connect SOUTHBOUND Flows (To 2 May 2025); Tech Selling in a Quiet Week
- Gold Road (GOR AU): Gold Fields (GFI SJ) Attractive Scheme Offer
- A/H Premium Tracker (To 2 May 2025): AH Premia Fall Small; Spread Torsion Provides Continued Alpha
- Smartpay (SPY NZ/SMP AU) Enters Exclusivity With Shift4 (?) As Tyro Walks
- Selected European HoldCos and DLC: April 2025 Report
ShinKong (2888 TT)/Taishin (2887 TT) – Time To Deal Is Shorter, But Risk To Peers Is Higher
- 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.
Gold Road Enters Scheme With Gold Fields
- Back on the 24th March, Gold Road (GOR AU) rejected an unsolicited offer from Gold Fields (GFI SJ) of $2.27/share cash plus GOR’s effective interest in De Grey Mining (DEG AU).
- GFI has now bumped the cash terms to $2.52/share or an all-in price of ~A$3.40/share, a 43% premium to undisturbed. This includes a A$0.35/share fully franked dividend (if paid).
- Conditions include the standard Scheme vote plus FIRB. 7.5% of shares out are supportive. Implementation is expected in October 2025.
Rare Arb Opportunity from ATS Breakout in Korea: Day-Night Spread
- 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.
HK Connect SOUTHBOUND Flows (To 2 May 2025); Tech Selling in a Quiet Week
- Q1 saw record quarterly inflows by SOUTHBOUND investors at HK$435bn, beating the previous 2021Q1 record by >HK$100bn. The first three weeks in April were HK$168bn. The next two weeks flat.
- Two weeks ago saw SOEs sold quite heavily in somewhat weaker volume. This past week saw only 3 days of SOUTHBOUND trading and saw net selling of big internet names.
- This week threatens to be quiet as well, as tariff news moves away from China for a little while, and towards foreign auto exporters, Canada, Mexico, and “trade frameworks.”
Gold Road (GOR AU): Gold Fields (GFI SJ) Attractive Scheme Offer
- Gold Road Resources (GOR AU) has entered a scheme with Gold Fields Ltd (GFI SJ). The consideration is A$2.52 cash + value per share of Northern Star Resources (NST AU) stake.
- The proposal is a logical consolidation to eliminate dissynergies between the JV partners. The offer is attractive compared to peer multiples, precedent transactions and historical trading ranges.
- The vote is low-risk, with irrevocables representing 7.51% of the outstanding shares. At the last close and for an early October payment, the gross/annualised spread was 4.1%/10.0%.
A/H Premium Tracker (To 2 May 2025): AH Premia Fall Small; Spread Torsion Provides Continued Alpha
- 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.
Smartpay (SPY NZ/SMP AU) Enters Exclusivity With Shift4 (?) As Tyro Walks
- On the 17th March, eftpos terminal provider Smartpay (SPY NZ/SMP AU) announced the receipt of two NBIOs
- One from Tyro (TYR AU) (@ NZ$1.00/share) and one from a third party (believed to be Shift4 (FOUR US)). Both parties were granted a limited period of commercial due diligence.
- After Shift4 (if indeed them) bumped terms to NZ$1.20/share/A$1.12/share, it was granted exclusivity on the 2nd May. Tyro has now walked.
Selected European HoldCos and DLC: April 2025 Report
- Discounts to NAV of covered holdcos mainly widened during April. CF Alba was delisted following conclusion of the takeover acceptance period. Discounts: GBL, 35.3% as of 2 May (vs. 37.6%);
- Heineken Holding, 12.3% (vs. 11.2%); Industrivärden C, 9.1% (vs. 2.9%); Investor B, 5.8% (vs. 4.2%); Porsche Automobile Holding, 29.2% (vs. 31.9%); Rio DLC 25.8% (vs. 21.7%); Vivendi 40% (vs. 40.1%).
- What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).
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