Daily BriefsEvent-Driven

Event-Driven: PropertyGuru , Nature Home Holding Company, Invesco Office J Reit, Del Monte Pacific, Spark Infrastructure, Beijing Huafeng Test & Control Technology-A, E Mart Inc and more

In today’s briefing:

  • PropertyGuru/Bridgetown 2 SPAC Listing/Merger – Second Time Lucky – Some Food for Thought
  • Nature Home (2083 HK)’s Full Offer
  • Invesco Real Estate Deal for Invesco Office (3298) Successful – Now For the Aftermath
  • Del Monte Pacific HoldCo Trade Update – A Better Play for Del Monte PH IPO
  • Spark Infrastructure (SKI AU): KKR & OTPPB Pay Up
  • STAR50 Index Rebalance Preview: Big Turnover in a Volatile Market
  • Starbucks Korea – Emart Takes Ownership Control & Prepares for an IPO

PropertyGuru/Bridgetown 2 SPAC Listing/Merger – Second Time Lucky – Some Food for Thought

By Sumeet Singh

PropertyGuru and Bridgetown 2 announced, on 23rd Jul 2021, that they have entered into a business combination agreement which will see PropertyGuru go public in the US. The transaction will value PropertyGuru at an EV of US$1.35bn and equity value of US$1.78bn.

We have looked at the company’s prior listing attempt when it tried to list in Australia in 2019. In this note, we will comment on the current listing arrangement.

Link to our previous notes:

Nature Home (2083 HK)’s Full Offer

By David Blennerhassett

After wood flooring manufacturer Nature Home Holding Company (2083 HK) was suspendedpursuant to the Code of Takeovers and Mergers” on the 19 July, in Nature Home (2083 HK): Possible Takeover Target I concluded if an Offer was to be tabled, it would likely be via a Scheme and at ~HK$1.70/share.

And this is exactly what transpired. 

Late last night, Nature Home announced an Offer from its founding shareholders, by way of a Scheme, at HK$1.70/share. The Offer Price will not be increased. Nature Home does not intend to declare any dividends during the Offer period. 

Dehua Tb New Decoration A (002043 CH) has given an irrevocable rollover undertaking for its 19.6% stake. 

Standard Scheme conditions apply. On account of the Rollover Agreement, Dehua does not form part of the independent shareholders who will vote on the merits of the Scheme.

This Offer looks done.

More below the fold.

Invesco Real Estate Deal for Invesco Office (3298) Successful – Now For the Aftermath

By Travis Lundy

The bid by the Invesco parent company (Invesco Real Estate and affiliates) for Invesco Office J Reit (3298 JP) turned out successful, and the bidders gained 5,727,676 units out of the 8,802,650 units out in the float. They now own 65.07% (having started with 6%) so this will end up going to an EGM.

As described in the original Notice concerning the Statement of Opinion (Support) on Tender Offer by Invesco Group released by IOR on 17 June and in line with my earlier insights, there will be an EGM which will aim to squeeze out minorities. That would theoretically require a two-thirds vote to change the Articles of Incorporation. 

The key date is 31 October 2021 because that is the end of the current (15th) fiscal period. The buyer should try to get the squeezeout accomplished by the end of that period, and if possible, to push it onward to a new fund on or before that date which can be declared to be distributed so that the tax conduit remains in place. 

The language in the Opinion says… 

Additionally, the Tender Offerors intend to request the Investment Corporation to convene an extraordinary unitholders’ meeting before the end of October 2021, which is the end of the 15th fiscal period of the Investment Corporation (meaning the last day of the fiscal period, hereinafter the same), and amend its articles of incorporation to change the end of the 15th fiscal period from October 31, 2021 to April 30, 2022.

There is separate language which says there will be no more dividends for the period ended 31 October 2021. Investors who hold on to the other 34.93% are now long a thing which will not earn anything in future for them. 

Who still owns units? What does that mean? Is there an arb? Are there index trades? 

The answers to this and more below the fold. 

Del Monte Pacific HoldCo Trade Update – A Better Play for Del Monte PH IPO

By Zhen Zhou, Toh

Del Monte Pacific (DELM SP) (DMPL) owns 87% of Del Monte Philippines (1575316D PM) (DMPI) which is looking to IPO this year. 

DMPL’s Consumer Foods division, Del Monte Foods (DMFL) hasn’t been doing well since DMPL acquired it in 2014. The IPO of DMPI will help to deleverage DMPL which could lead to a much needed catalyst for further re-rating. Despite DMPL’s recent share price rally, there is still still room for further now that the IPO seems well underway.

We looked at DMPI’s IPO in:

Spark Infrastructure (SKI AU): KKR & OTPPB Pay Up

By David Blennerhassett

After rejecting two take-private proposals from PR outfit firm KKR and Ontario Teachers’ Pension Plan Board (OTPPB), Aussie poles and wires company Spark Infrastructure (SKI AU) has ostensibly supported the Consortium’s improved tilt of $2.95/share.

The Consortium (KKR/OTPPB)’s latest proposal, up from the initial Offer of $2.70/share, was considered by Spark’s board to be in the interest of its shareholders to engage further. As such, Spark has provided the Consortium with due diligence on a non-exclusive basis.

This Offer remains pre-conditional, and is subject to satisfactory DD, together with board approval from both KKR and OTPPB.

A firm Offer, should one unfold, would be subject to FIRB approval, and the approval from Spark’s shareholders at a Scheme Meeting.

Yet this looks like a full (er) Offer than the one rejected on the 15 July.

More below the fold.

STAR50 Index Rebalance Preview: Big Turnover in a Volatile Market

By Brian Freitas

The SSE STAR 50 (STAR50 INDEX) is a free float market cap weighted and is made up of the 50 largest stocks based on full market cap that are listed on the STAR Market.

The review period for the September rebalance ends on 31 July, the results of the rebalance will be announced towards the end of August and the changes will be implemented at the close of trading on 10 September.

With only 2 trading days left in the review period, we see Shanghai Shen Lian Biomedical (688098 CH)Piesat Information Technology (688066 CH)Guangzhou Fang Bang Electr-A (688020 CH)Shenzhen Lifotronic Techno-A (688389 CH) and Appotronics Corp Ltd (688007 CH) as high probability deletions from the index.

Coming up with a definitive list of inclusions is tougher given the subjectivity of the index rules for this review. The subjectivity comes from the whether the index committee uses a minimum listing history period of 12 months or 6 months.

Higher probability inclusions (if a 12 month minimum listing history is used) are Eyebright Medical Technology Beijing (688050 CH), Sinocelltech Group (688520 CH), Beijing Huafeng Test & Control Technology-A (688200 CH), Zhejiang Orient Gene Biotech-A (688298 CH) and Tinavi Medical Technologies (688277 CH).

Lower probability inclusions (if a 6 month minimum listing history is used) are Zhejiang Supcon Technology (688777 CH), Tianneng Battery Group (688819 CH), Bestechnic Shanghai (688608 CH), 3peak (688536 CH) and Pylon Technologies Co Ltd (688063 CH).

The inclusions, exclusions and capping changes will result in a one-way turnover of 8.45% and result in a one-way trade of CNY3.3bn.

Starbucks Korea – Emart Takes Ownership Control & Prepares for an IPO

By Douglas Kim

On 27 July, E Mart Inc (139480 KS) announced that it will take over the control of Starbucks Korea. Prior to this announcement, Emart and Starbucks Corp (SBUX US) owned 50% of Starbucks Korea, respectively. In this transaction, Emart will purchase an additional 17.5% stake in Starbucks Korea for 474.3 billion won (US$421 million) and GIC (Singapore) will purchase the remaining 32.5% stake in Starbucks Korea.

The implied valuation of 2.7 trillion won for Starbucks Korea in the acquisition of the additional 17.5% stake from Starbucks Corp (SBUX US) by Emart suggests a P/E of 23.5x, using the average annual net profit of Starbucks Korea in the past three years. Hence, this M&A deal for Starbucks Korea was completed at nearly 50% discount to the valuation of Starbucks Corp (SBUX US).

IPO of Starbucks Korea & SSG.com/Ebay Korea in the Next 3 Years – In the next three years, Emart is likely to IPO its key affiliates including Starbucks Korea (67.5% ownership) and SSG.com/Ebay Korea. Emart has agreed to acquire an 80% in Ebay Korea. We believe that these IPOs are likely to have a positive impact on the Emart shares as more investors try to value them on their potential market values, rather than book values. 

Before it’s here, it’s on Smartkarma