In today’s briefing:
- Rakuten Bank (5838 JP) Overnight Offering at a Fat Discount
- Swire (19 HK / 87 HK) Announces NEW, Bigger, Better Buyback
- Rakuten Bank Placement – Was Expected at Some Point, Current Timing Seems Opportunistic
- StubWorld: Swire’s Latest Buyback
- Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
- Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.
- WHSP’s Non-Binding Indicative Offer for Perpetual Turned Down
- Tokyo Rakutenchi (8842 JP): Toho’s Tender Offer at JPY6,720
- Sunshine Insurance Group IPO Lock-Up – US$5.3bn Lockup Release Tomorrow, with No Liquidity
Rakuten Bank (5838 JP) Overnight Offering at a Fat Discount
- After the close today, Rakuten Group (4755 JP) announced the sale of 25.5mm shares of Rakuten Bank (5838 JP), right as the IPO lockup was reaching its expiry. Expected.
- Pricing is 6-7 Dec (pre-Tokyo open 7 Dec), delivery 11 Dec 2023. Indicative price range is 8.5-12.5% discount for a deal of US$425mm or so.
- In an interesting technical detail, this will take Rakuten below 50%. There is some near-term index demand, some in April, some next October. Rheos could be more overhang.
Swire (19 HK / 87 HK) Announces NEW, Bigger, Better Buyback
- Yesterday afternoon, Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK) announced a new buyback program. The last one was announced August 2022 and ran until the AGM.
- That was HK$4bn. In the meantime the company paid an HK$8.12 special div on the Swire As (14%) in September (on top of the HK$1.20 regular div).
- Now they have announced a new HK$6bn buyback buying both A Shares and B shares. Details, index impact, historical B/A trading patterns, etc, below.
Rakuten Bank Placement – Was Expected at Some Point, Current Timing Seems Opportunistic
- Rakuten Group (4755 JP) aims to raise US$430m via selling around 14.6% of Rakuten Bank (5838 JP).
- RB is the largest internet bank in Japan, by number of accounts. As of Sep 23, it had 14.3m deposit accounts with a total deposit base of JPY9.5tn.
- In this note, we will talk about the deal dynamics and updates since our last note.
StubWorld: Swire’s Latest Buyback
- Yesterday afternoon (5th Dec), Swire Pacific (A) (19 HK) (and Swire Pacific (B) (87 HK)) announced a large (HK$6bn) buyback.
- The response this morning sees Swire A up 14.4% (as I type), and 11.8% for Swire Bs.
- I still like the idea of buying Swire A and Swire B outright here.
Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
- Rakuten Group (4755 JP) is looking to sell 25.5m shares of Rakuten Bank (5838 JP) via a secondary offering at a discount of between 8.7%-12.3%.
- The offering will raise a maximum of US$433m and Rakuten Group (4755 JP) will use the funds to reduce its interest-bearing debt by the early repayment of its bonds.
- There will be limited passive buying at the time of settlement of the stock but there is an index inclusion coming up that will result in passives buying.
Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.
- Yesterday, Tokyo Rakutenchi (8842 JP)‘s #1 shareholder Toho Co Ltd (9602 JP) agreed to buy out the rest of Tokyo Rakutenchi from its #2 and #3 shareholders and minorities.
- The Takeover Price is a 51% premium. Which is nice. But the asset is a real estate portfolio, and it was sold as a company, not a real estate portfolio.
- The revaluation surplus to market value for the real estate assets is more than net equity, so Takeover PBR >1.0, but Price/NAV of the takeover is 0.7x, without synergies included.
WHSP’s Non-Binding Indicative Offer for Perpetual Turned Down
- On 21 November, Washington H. Soul Pattinson and Co. Ltd (SOL AU) submitted a non-binding, indicative offer to acquire Perpetual Ltd (PPT AU) at ~A$27/share.
- A few hours ago, that offer was rejected by Perpetual Ltd (PPT AU)‘s Board citing a material undervaluation, conditional on demerger of the Asset Management business and execution risk.
- If the deal goes through, there will be small passive buying in Washington H. Soul Pattinson and Co. Ltd (SOL AU). No major index changes expected.
Tokyo Rakutenchi (8842 JP): Toho’s Tender Offer at JPY6,720
- Tokyo Rakutenchi (8842 JP) has recommended Toho Co Ltd (9602 JP)’s tender offer of JPY6,720 per share, a 51.5% premium to the undisturbed (6 December).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 24.29% ownership ratio.
- Based on the irrevocables, the minimum acceptance condition requires a 30.2% minority acceptance rate. This acceptance rate is doable as the offer represents a ten-year high.
Sunshine Insurance Group IPO Lock-Up – US$5.3bn Lockup Release Tomorrow, with No Liquidity
- Sunshine Insurance Group (6963 HK) (SIG), a life, health and P&C insurance company, raised around US$850m in its HK IPO in Dec 2022. Its IPO linked lockup will expire tomorrow.
- SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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