Equity Capital Markets

Weekly Top Ten Equity Capital Markets – Jun 9, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

1. MMG (1208 HK) – $1.1bn+ Rights Offering – Expect Regular Rights Trading Dynamics

By Travis Lundy, Quiddity Advisors

  • Mmg Ltd (1208 HK) today announced a 2:5 Rights Offering to raise US$1.15bn at HK$2.62/share in order to pay down debt from their recent Botswanan copper mine acquisition. 
  • It was a sizeable acquisition, and the near-term EV/EBITDA of the acquisition is 10x or above. The longer-term EV/EBITDA is in the 3s based on expansion later this decade.
  • The Rights Offering is underwritten, supported by its 67.5% owner. SOUTHBOUND holds 10+%. There are short dynamics, arb dynamics, “don’t wanna spend more” dynamics. There’s a path here.

2. Shift Up Delays the IPO and Stellar Blade Tops Number One Game in the US in April

By Douglas Kim, Douglas Research Advisory

  • On 5 June, Shift Up announced that it will be postponing its IPO to July. The original book building period for the institutional investors was from 3 to 13 June.  
  • The final book building date has been postponed to 27 June. The subsequent public offering subscription for general investors was also postponed to 2 to 3 July.
  • A major investment positive of Shift Up is enormous initial success of Stellar Blade which was the best selling game in the U.S. and numerous other countries in April 2024.

3. Webtoon Entertainment IPO Preview

By Douglas Kim, Douglas Research Advisory

  • Webtoon Entertainment is getting ready to complete its IPO on the NASDAQ exchange in 2H 2024. Webtoon Entertainment is a subsidiary of Naver Corp (035420 KS).
  • Webtoon is seeking to raise as much of US$500 million at a valuation of US$3 billion to US$4 billion.
  • Webtoon Entertainment is one of the largest Korean company related IPOs in 2024. 

4. What Did FSS Point Out to Shift Up? & What Impact Would It Have on Bookbuilding Sentiment?

By Sanghyun Park, Clepsydra Capital

  • FSS wants Nikke’s MAU data to address revenue concerns. They also seek April and May sales data for Stellar Blade to address valuation concerns despite its recent launch.
  • Shift Up updated the prospectus with Nikke’s increasing MAU data but didn’t include Stellar Blade sales data. FSS may request further revisions, possibly delaying the IPO again.
  • Nikke’s MAU has risen but plateaued versus the previous quarter, and uncertainty surrounds Stellar Blade’s April-May sales, potentially impacting IPO pricing.

5. Yankuang Energy Placement – Doesn’t Appear Well Flagged Although Deal Size Is Large

By Ethan Aw, Aequitas Research

  • Yankuang Energy Group (1171 HK) is looking to raise up to US$608m through a primary follow-on, via selling 270m H-shares.
  • The deal is a somewhat large one to digest, at 10.6 days of three month ADV and 2.7% of current mcap.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

6. Sakura Internet Placement – Beneficiary of the AI-Wave Looking to Double Down

By Clarence Chu, Aequitas Research

  • Sakura internet (3778 JP) is looking to raise US$127m from its primary follow-on. Proceeds will be used towards purchasing GPU servers, and constructing new data center facilities.
  • While 11% of total shares outstanding are offered here, the deal would be easily digested by the market, representing just 0.8 days of its three month ADV.
  • In this note, we run the deal through our ECM framework and comment on deal dynamics.

7. MMG (1208 HK): US$1.2bn Highly Dilutive Rights Issue

By Arun George, Global Equity Research Ltd

  • Mmg Ltd (1208 HK) will raise HK$9.1bn (US$1.2bn) through 2 rights shares for every 5 existing shares rights offering. The rights price is HK$2.62, a 24.7% discount to the TERP.
  • The rights proceeds will be used to repay existing debt, which will allow it to use other funds to better support the ongoing development of the operating mines.
  • MMG shares should continue to decline heading into the ex-rights date. The shares go ex-rights on 11 June, and the rights start trading from 24 June to 2 July (inclusive).

8. Webtoon Entertainment Pre-IPO – The Positives – Just Turned Profitable

By Ethan Aw, Aequitas Research

  • Webtoon Entertainment (WBTN US) is looking to raise up to US$500m in its US IPO.
  • Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content. 
  • In this note, we talk about the positive aspects of the deal.

9. Webtoon Entertainment Pre-IPO – The Negatives – Korea Revenue Declined, JP Acquisition to the Rescue

By Ethan Aw, Aequitas Research

  • Webtoon Entertainment (WBTN US) is looking to raise up to US$500m in its US IPO.
  • Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
  • In this note, we talk about the not-so-positive aspects of the deal.

10. Raspberry Pi IPO Valuation Analysis

By Douglas Kim, Douglas Research Advisory

  • Raspberry Pi is expected to raise about £157 million in this IPO. The conditional trading for this IPO is expected to be take place on 11 June.
  • We estimate Raspberry Pi to generate sales of US$342.1 million (up 28.7% YoY) and operating profit of US$48.5 million (up 29.3% YoY) in 2024.
  • Our base case valuation of Raspberry Pi is market cap of £772 million or £4 per share (43% higher than the high end of the initial IPO price range).