In today’s briefing:
- Link Admin/D&D Deal Appears Toast As The Woodford Shoe Drops
- Frasers Hospitality Trust Scheme Vote Fail – Minority Apathy Meets Vocal Minority. Units Drop Hard.
- Giordano’s VGO Lapses
- PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes
- KODEX Battery ETF Rebalancing: Target Weight & Qty in CU of Each Constituent
- PropertyGuru SPAC Lock-Up – Two PE’s with a US$450m Stake Are Stuck with a Liquidity Conundrum
- VNET’s Opportunistic US$8.20 Bid from the Founder
- Canon Buyback Done, Ricoh’s Done Shortly, Back To Your Regularly Scheduled Program
- CALB Pre-IPO – PHIP Updates – Growth Picking up Further, Margins Turnaround
- Link’s Scheme on Life Support as the FCA Lands a Heavy Blow
Link Admin/D&D Deal Appears Toast As The Woodford Shoe Drops
- The UK Financial Conduct Authority will approve Dye & Durham’s Offer for Link Administration (LNK AU) provided it backstops restitution and/or redress payments that the FCA may levy on …
- … Link Fund Solutions Limited (LFSL) in relation to its management of the Woodford Fund. The amount? Up to a maximum ~A$523mn.
- The FCA decision is not final. LFSL does not agree with its view. If D&D does not accept this commitment then a condition under the Scheme may not be satisfied.
Frasers Hospitality Trust Scheme Vote Fail – Minority Apathy Meets Vocal Minority. Units Drop Hard.
- In a somewhat extraordinary turn of events, the Scheme Meeting for the Frasers Hospitality Trust (FHT SP) takeover did not garner enough votes to get to YES.
- About 3% of units (about 8% of minorities) came out against. But only 18.8% of minorities actually voted. The deal has failed. The bidders can’t come back for a while.
- The units are trading down nearly 25% today as a result. This is cheap against both hospitality and major S-REIT peers. Inside, I discuss Overhang and Divs.
Giordano’s VGO Lapses
- The offeror and acceptances reached 46.04%, just short of the 50% minimum acceptance condition. The offeror has decided to let the Giordano International (709 HK) offer lapse.
- The offer fell short of the 50% threshold as the Cheng family mistakenly assumed that shareholders behind Halycon’s stake were friendly shares, which would support the offer.
- The downside will be muted as the shares are trading in line with the 1-year average forward P/E, minorities thought the offer was low, and David Webb is a buyer.
PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes
- From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
- This could result in three deletions from the index which will result in three stocks being added to the index. Passive trackers selling the deletes will push the stocks lower.
- The three current constituents could remain in the index if they sell stock to increase the free float. That would in turn put downward pressure on the stocks.
KODEX Battery ETF Rebalancing: Target Weight & Qty in CU of Each Constituent
- KODEX Battery ETF rebalancing began on September 8 and runs until this Tuesday, the 14th. Its AUM is 1.3 trillion won, and the number of constituents is only 25.
- The quantity change in one CU for the 13th was confirmed. Tomorrow’s are estimates based on equal daily weights. With still two-thirds to go, the flow/price impact looks still juicy.
- SK Innovation, L&F, LG Energy, and Ecopro will show a significant size in weight change and passive flow, so they are safe names for a LONG SHORT basket trading.
PropertyGuru SPAC Lock-Up – Two PE’s with a US$450m Stake Are Stuck with a Liquidity Conundrum
- PropertyGuru (PG) tried to raise around US$300m when it undertook a merger with Bridgetown 2 SPAC in Mar 2022.
- The transaction valued PropertyGuru at an EV of US$1.35bn and equity value of US$1.78bn. It is now trading at less than half that valuation and with very limited liquidity.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
VNET’s Opportunistic US$8.20 Bid from the Founder
- 21Vianet Group (VNET US) disclosed a privatisation proposal from the founder at US$8.20 per ADS, a 2.5% premium to The Hina Group/Industrial Bank’s offer of US$8.00 (disclosed on 11 April).
- The data centre industry continues to be a hotbed for M&A. Bloomberg reported on 27 July that MBK Partners is mulling an offer for VNET.
- The offer is unattractive, and Mr Cheng, with 28.79% of voting rights, will need the support of other substantial shareholders. This latest offer underlines the current mispricing of the shares
Canon Buyback Done, Ricoh’s Done Shortly, Back To Your Regularly Scheduled Program
- Canon Inc (7751 JP) has announced two buyback programs this year of ¥50bn each. Ricoh Company Ltd (7752 JP) announced one in May for ¥30bn.
- The result is 2.9% bought back vs 4.4%. The accretion nod goes to Ricoh. But so does the overhang nod going forward. Effissimo+Crossholders is 40% for Ricoh. Mid20s for Canon.
- Buyback impact-related trade timing has worked for Canon. Ricoh’s buyback ends imminently. There may be a trade to do here.
CALB Pre-IPO – PHIP Updates – Growth Picking up Further, Margins Turnaround
- CALB aims to raise around US$1.5bn in its Hong Kong IPO.
- CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products.
- In this note, we talk about the updates from the company’s recent PHIP filings.
Link’s Scheme on Life Support as the FCA Lands a Heavy Blow
- FCA approval, a condition precedent, will be granted subject to a condition that Link Administration (LNK AU) makes funds available to cover any redress payments related to the Woodford matters.
- The FCA’s maximum redress payment is £306 million. The timeline and amount of the final FCA fine remain unknown. Dye&Durham/DND and Link will struggle to find a resolution.
- With a 30 September end date, the deal is teetering on collapse. The share price may prove attractive for long-term value investors as it reflects a sizeable FCA fine.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
