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Singapore Airlines

Last Week in Event SPACE: Singapore Air, Evergrande/Hopson, HomeCo/Aventus, Irongate, Shinsei Bank

321 Views24 Oct 2021 07:42
SUMMARY

Last Week in Event SPACE ...

  • Singapore Airlines (SIA SP)'s Rights and MCBs significantly diluted common shareholders so even if there was a V-shaped recovery in business prospects, there would not be a V-shaped recovery in earnings per share. And that was the best case. The worst-case was worse.

  • In the wake of Evergrande (3333 HK)'s fall-out, a large number of developers will squeak through, and survive with their equity intact. A large number of smaller niche developers with single-city exposure will be in danger, especially those which specialise in higher-end property.
  • In hindsight, the no-deal with Evergrande Property Services (6666 HK) is a good thing for Hopson Development (754 HK). If Evergrande were to enter receivership, and the receiver deemed the stake sale in EPS was at a reduced value, it may make an application to the courts to unwind the transaction.
  • SBI Holdings (8473 JP) has said it has no intention of raising the Tender Offer Price for Shinsei Bank (8303 JP). That doesn't mean it won't. But shareholders need to provide pressure, or they need to hope Shinsei develops the intestinal fortitude to play real hardball and give money back.
  • This deal is less HomeCo Daily Needs REIT (HDN AU) buying Phosphagenics Ltd (AVE AU) at a premium than HDN agreeing to be taken over by AVN management in a takeunder and being absorbed into HCM's management construct.
  • 360 Capital REIT (TOT AU) and Irongate Group (IAP AU) don't see eye to eye, in potentially a hostile situation reminiscent of the ARA/Cromwell Property (CMW AU) deal earlier this year.
  • Plus, other events, CCASS movements (flagging possible Offers and IPO lock-ups), and Mood Spins.

(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classifications, and Events - or SPACE - in the past week)

EVENTS

Singapore Airlines (SIA SP) (Mkt Cap: $11.6bn; Liquidity: $27mn)

If we get a rebound as the Street forecasts - which despite the accelerated start of the Vaccine Travel Corridor Travis Lundy expects will be difficult because so much of the rest of the world is still not open to non-quarantine travel - and profit margins are as expected - i.e. at 9yr pre-covid average by March 2025 (i.e. in three years' time), then on that model, Singapore Air will accrue S$4bn of net income over the next 9 years in total - not the S$11.5bn required to maintain the current S$5.25/share NAV level. That would result in a post-MCB conversion NAV/share level of S$4.08/share assuming that

  • To get to a June 2030 level of post-conversion NAV/share equivalent to S$5.25/share, that would require making an additional 5.4% Net Profit Margin on that modelled/forecast revenue. That is unlikely. But even if that were possible, it also means no dividends for 9 years. And 9 years from now, the NAV/share would be today's share price.
  • If flying is so popular several years from now that in the latter half of the decade net profit margins are nearing 10% - i.e. well over twice the margins of the previous pre-covid decade - on record revenues, Travis expects there will be competition that this model does not assume.
  • The capital structure of Singapore Air is still "heavy." It will remain that way for a long while. The volatility of the capital may be low, but that does not make the shares attractive.

(link to Travis' insight: Singapore Airlines - Still "Heavy")

In Evergrande Update - Limited Contagion, and Positive Regulatory Noises Near-Term, Travis gave an in-depth update on the Evergrande (3333 HK) situation. He reckons that existing projects are not in danger of completion as long as the property developers have not done something dramatically bad. Banks and bondholders will likely be on the hook. This should, over time, mean better confidence that if one buys, one will be getting what was promised. HOWEVER, none of this yet means that if a would-be homeowner buys that would-be homeowner is guaranteed to see one's investment go up. Evergrande is still a sell on the equity (even if it Hopson bought Evergrande Property Services (6666 HK)).

  • Travis thinks all of the developers are in a tough bind even though a bunch of them will come out fine. The problem is that the marked-up equity is probably marked up too high. The land bank is no longer "worth" its mark, and "doing the right thing" for "Common Prosperity" may involve earnings less on development. A large number of developers will squeak through, and survive with their equity intact. A large number of smaller niche developers with single-city exposure will be in danger, especially those which specialise in higher-end property.
  • He expects banks will be OK for the most part (he could imagine some regional banks (like Shengjing Bank Co Ltd H (2066 HK)) could end up hurt badly, but I expect most will end up seeing their (secured) project loans treated well, and their (unsecured) trust loans will be treated less well.
  • Greater global contagion is a 2022-2023 problem. What has been sold year-to-date will be constructed in the next year. H2 2022 and beyond is where we will see slower iron ore/steel/cement demand. American Mom & Pop investors will not be overly exposed to such contagion. And outside luxury goods consumption in China possibly being reduced, Travis expects such global non-China Mom & Pop retail investor impact to be limited. While a number of very large multinationals get 20-30% of their revenue from China, they get 10% of OP from China, which means a slowdown in growth or even negative growth would hurt, but would not be existential in any way.

NTT UD REIT (8956 JP) announced a follow-on equity offering after market close on 18th October 2021 to fund part of their recent property acquisition. The primary offer quantity is 80,600 units. In addition, there will also be an over-allotment quantity of 4,040 units. The total size of this offering could be roughly ¥12bn (~US$105mn). On average, J-REITs have historically outperformed the TSEREIT Index in the wake of follow-on equity offerings, with win rates exceeding 80%. While JREIT offerings are mostly of interest to primary market investors, we also see such offerings as potential catalysts for strong secondary market performance making these events worth tracking for secondary market investors too. Janaghan Jeyakumar has previously discussed the historical pre- and post-offering performance of JREITs in J-REIT Offering Primer: Get Ready for Offering Season 2021. Link to Janaghan's insight: NTT UD REIT (8956 JP): Offering Could Be Catalyst for Outperformance Vs TSEREIT Index.

The two oldest listed investment companies in Australia - Washington H. Soul Pattinson and Co. Ltd (SOL AU) ("WHSP") and Milton Corp Ltd (MLT AU) - decided in late Q2 to merge, and then they merged in Q3, with Milton shares delisting about a month ago and the deal becoming effective on 5 October - about two weeks ago. As it is, Travis believes that the "natural" level of the Price/NTA Premium for WHSP should now lower than it was pre-merger, but it need not be that much lower than now. Ultimately, there is probably another ~7% to go in order to fully unwind the rest of the "premium to NTA" that WHSP paid for Milton shares. Near-term the price movement may also be influenced by 12-13mm shares of WHSP to buy (given that it is a decent chunk of float. Given the NTA's higher correlation to S&P/ASX now (because the Milton contribution has a VERY high r-squared), hedging with S&P/ASX would seem appropriate. Link to Travis' insight: Washington H Soul Pattinson - Flows, Valuations, and Next Steps.

Large-cap Diversified JREIT Sekisui House Reit (3309 JP) announced a follow-on equity offering after market close on 18th October 2021 to fund part of their recent property acquisition. The primary offer quantity is 137,500 units. In addition, there will also be an over-allotment quantity of 6,875 units. The total size of this offering could be roughly ¥12bn (~US$105mn). In Sekisui House REIT (3309 JP): Post-Offering Market Outperformance Possible, Janaghan evaluates the attractiveness of SHR's latest offering with greater emphasis on the potential for strong post-offering secondary market performance.

M&A - ASIA

Aventus Group (AVN AU) (Mkt Cap: $1.5bn; Liquidity: $4mn)

HomeCo Daily Needs REIT (HDN AU) and Aventus announced they had entered into a Binding Scheme Implementation Deed for HDS to acquire AVN through a Scheme of Arrangement. Terms are that AVN security-holders will receive 2.2 HDN securities AND either A$0.285/unit of cash or 0.038 HMC securities (either or, not a combination). HDN is contributing 93% of the total consideration paid to AVN holders. Home Consortium Ltd (HMC AU) is contributing the other 7%, which will lower HMC's ownership of HDN post-merger. The consideration results in a premium of 15.3% from the Friday close, a 16.4% premium to one-month VWAP, and a 41.9% premium to 30 June 2021. There is ~4% accretion involved for security-holders of both sides assuming the cash option is take-up.

  • Both HDN and AVN boards unanimously recommend/support the deal (AVN in the absence of a superior proposal) and AVN shareholders and directors representing 29.3% of AVN voting rights (22.6% by BBRC Retail and 6.7% by the AVN Board) have agreed to vote for the Scheme. Separately, HMC has done a deal to buy a 6% stake in AVN directly from BBRC at a cash amount equal to the Offer Price. That will leave the HMC holding at 13.5% post-merger.
  • HDN is the smaller of the two and existing AVN shareholders will end up with nearly 57% of the total NEWCO HDN shares out after the deal (AVN minorities will have 47.1% while after selling 6% to HMC, BBRC will have 10.1%). HMC will have 13.5% of the post-merger business. Importantly, the entire management team of AVN is expected to join HMC, and the CEO and CFO of AVN will become CEO and CFO, respectively, of HDN MergeCo.
  • The deal is reasonably well-supported at the outset, and one imagines that the large holders who have not declared will be OK. It will come down to direction. If both stocks fall from here, HDN may find itself with another suitor who wouldn't mind getting the assets. For that, being long HDN vs AVN is perhaps not a bad trade. Classically, the acquirer trades rich to the acquiree, even though in this case it is not clear that is what is going on. For that, Travis thinks the pair a bit rich, and would not want to own HDN outright or against AVN yet.

Links to:
Travis' insight: HomeCo Daily Needs REIT (HDN AU) To Merge with Aventus (AVN AU) In Self-Takeunder
Brian Freitas' insight: HomeCo Daily Needs REIT's Merger with Aventus Group to Create New ASX200 Inclusion

Irongate Group (IAP AU) (Mkt Cap: $0.9bn; Liquidity: $1mn)

Back on the 28 January of this year, 360 Capital REIT (TOT AU) acquired a 9.18% stake in property play IAP for $78.6mn, or ~A$1.40/security. Together with 360 Capital (TGP AU), that stake was ultimately bumped 19.11% on the 20 July. IAP also placed out 34mn shares at A$1.47/security on the 16 June. An AGM notice was issued on the 30 July, in which it detailed 360 Capital's nomination of Tony Pitt and James Storey to the board. The board recommended shareholders vote against these two board nominations. 360 Capital attempted to withdraw its nominations on the 26 August, but IAP said it was too late. At the AGM on the 31 August, those two appointments were voted down.

  • IAP has now announced it has it received an unsolicited, highly conditional, and indicative non-binding proposal from 360 Capital REIT and 360 Capital (TGP AU), the REIT's largest shareholder, by way of a Scheme. The consideration price is A$1.6047/security, in cash, or a headline price of A$1.65 less the anticipated distribution of A$0.0453/security for the half-year ended 30 September 2021. 360 Capital currently holds 128.97mn securities or 19.99%.
  • The indicative proposal is also conditional on "one or more of ESR Real Estate (Australia) Pty Ltd or its affiliate’s managed funds (together, ESR Australia) entering into an agreement with 360 Capital to purchase an undisclosed number of selected assets from IAP’s portfolio on terms yet to be agreed".
  • Hardly a clean approach and Irongate sees the proposal as highly conditional. This is leaning towards a Hostile Offer, somewhat akin to the ARA Asset Management/Cromwell Property (CMW AU) - Cromwell/ARA: A Festering Relationship.

Entie Commercial Bank (2849 TT) (Mkt Cap: $1.2bn; Liquidity: $1mn)

Taiwan-based Financial Services group IBF Financial (2889 TT) ("IBF") and EnTie signed a Share Swap Agreement according to which IBF will acquire 100% of EnTie in a cash-and-scrip deal worth approximately NT$33bn (~US$1.2bn). EnTie shareholders will receive NT$9.466730 in cash and 0.493344 IBF preferred shares per EnTie Share. IBF is expected to issue new common shares to raise funds for the cash portion of this Deal and will also issue new preferred shares to fulfil the scrip portion of this Deal. The Deal is conditional on approval from the shareholders of both companies. With the record date for the shareholder voting approaching, this Deal is currently facing some hurdles.

  • Shareholder Approval from EnTie shareholders is quite straightforward but that from IBF could be more tricky. EnTie's top shareholder Longreach Edith holds 50%+ which means if they vote in favour, the Deal should go through regardless of the response from others. For IBF, the shareholder base is more fragmented with top shareholder Tze Shin International (2611 TT) holding ~5.3%. This could be a potential road block for this Deal given that IBF's Audit Committee has raised objection with regards to this share swap, stating that the Deal consideration is on the high side and is not fair and reasonable.
  • The gross spread will depend on the value assigned for the preferred shares. Assuming an EnTiE share price of NT$16.70, the expected issue price of NT$15.70 translates to a gross spread of 3.1% and at the lower and upper bounds of the EnTie Independent Expert's fair value range the spread is 4.8% and 5.7% respectively. This is not a low-risk situation and Janaghan expects this to trade with some noise.

(link to Janaghan's insight: EnTie (2849 TT) - IBF (2889 TT): US$1.2bn Cash & Scrip Deal Far From Done)

Shinsei Bank (8303 JP) (Mkt Cap: $3.5bn; Liquidity: $24mn)

SBI Holdings (8473 JP) launched a surprise hostile-ish Tender Offer on Shinsei Bank about 6 weeks ago, and that has now officially become HOSTILE. Shinsei says it is AGAINST the Tender Offer by SBI, and asks shareholders to not tender unless Shinsei changes its opinion, saying the Offer is a coercive tender; it does not offer enough of a premium. A 37.7% premium for just over one third of the float comes to a 13-14% premium for the whole float - which is not adequate (I tend to agree); the price itself at ¥2,000/share and does not represent fair value for the shares given Shinsei's excess capital and the management forecast of earnings power (I tend to agree); and SBI does not yet guarantee to treat minority investors post-tender with respect given the inherent conflict of interest which will be created. Shinsei didn't tell you what the "fair price" or "intrinsic value" is. They kept that in their back pocket. That is crucial.

  • The way this SHOULD happen if Shinsei wants to keep SBI at bay is that Shinsei says if shareholders vote through the poison pill, they will buy back shares, and issue prefs and use that money to buy back shares too - in a tender offer. That would dilute SBI, temporarily, and it would raise the ROE and the stock price significantly, making it more difficult for SBI to get a larger foothold.
  • This is and has been an obvious outcome. Travis even wrote about the buyback tender offer advantages in December last year in 2021 High Conviction - Shinsei Bank. But it is not clear that Shinsei is going to be creative enough for that.
  • The possibility they are, combined with the still relatively high minimum pro-ration of the SBI Tender suggests that owning in the low ¥1900s is a good deal as long as you are aware of the timing of the index down-weightings subsequent to an SBI tender completing.

(link to Travis' insight: Shinsei Objects to SBI Tender - Offers "Requirements" To Approve

Class Ltd (CL1 AU) (Mkt Cap: $0.3bn; Liquidity: $3mn)

Australian Wealth management platform Hub24 Ltd (HUB AU) and Cloud-based accounting software provider CL1 announced today they had entered into a Scheme Implementation Deed according to which HUB24 will acquire 100% of CL1 by way of a Scheme of Arrangement. CL1 shareholders will receive 1 HUB24 share for every 11 CL1 shares and A$0.10 in cash per CL1 share. Furthermore, CL1 shareholders will also be entitled to any FY22 interim dividend of up to 2.5 cents per shares declared in addition to the Cash Consideration. The Deal is conditional on CL1 Shareholder Approval and is expected to be completed in Feb 2022.

  • This is a friendly cash-and scrip Deal. The CL1 Board has unanimously recommended the Deal to CL1 Shareholders. The top shareholder Spheria Asset Management which holds 19.99% has agreed to vote in favour. Together with Spheria, Janaghan estimates friendly shareholders who could be supportive of the Deal to hold at least 44mn shares (35.4% of total shares outstanding).
  • On a cash-equivalent basis, the Deal consideration translates to premia of 71.6%, 76.8%, and 72.4% against CL1's pre-announcement closing price, 1-month VWAP, and 3-month VWAP respectively according to estimates by CL1. While HUB24's PER(NTM) is roughly double that of CL1, CL1's discount to HUB24 was quite close to its 3-year average at the time of Deal Announcement.
  • In the absence of any superior proposal, Janaghan expects this Deal to complete.

(link to Janaghan's insight: Class - Hub24: Scheme Trading Wide)

Gold exploration outfit Ramelius Resources (RMS AU) has made a recommended takeover offer for Apollo Consolidated (AOP AU), by way of cash and scrip, at A$0.56/share, a 27% premium to Apollo's 3-day VWAP. Apollo shareholders will receive 0.1375 Ramelius shares for every Apollo share held plus cash of $0.34 for each Apollo share, in a roughly 39%/61% scrip/cash split. The Offer has the unanimous backing of Apollo's board and Apollo directors holding 13.7% of shares out will tender their shares into the Offer. The Offer is conditional on 90% minimum acceptance by Apollo shareholders. This looks like a done deal. The transaction roughly mirrors the deal structure of Ramelius' successful takeover of Spectrum Metals (SPX AU) last year and discussed in Spectrum Metals: Inside Ramelius' Wheelhouse. Link to my insight: Ramelius (RMS AU) Adds Apollo To Its Portfolio.

  • UPDATE: Gold Road Resources (GOR AU) has made an unconditional off-market all-cash Offer - at A$0.56/share - for Apollo. Gold Road is standing in the market at $0.56/share. Gold Road has 19.9% at the time of this announcement.

Posco International Corporation (047050 KS), the trading arm of South Korea's mega-steel play Posco (005490 KS), has been granted exclusive due diligence through to 5 November to bump its indicative Offer of A$4.40/share for natural gas producer Senex Energy (SXY AU). PIC first approached Senex on the 2 September with a A$4.00/share Offer, then A$4.20 on the 27 August, before submitting an indicative proposal of A$4.40/share on the 2 September, which is a 40% premium to the 30-day VWAP on that day. PIC was granted due diligence on the 15 September. The DD extension is to provide PIC with additional time to assess a further revised proposal at a higher price. Should a firm Offer transpire, it will be done via an off-market takeover with a 50.1% minimum acceptance condition. FIRB approval would also be a condition. Senex is open to other offers. Link to my insight: Senex (SXY AU): Posco's Looming Offer.

On the 13 July this year, iCar Asia Ltd (ICQ AU) announced it had received a non-binding proposal from privately-held Malaysian-based Carsome Group to acquire 100% of iCar's shares for A$0.55/share by way of a Scheme. After exclusive due diligence through to 30 September, iCar and Carsome entered into Scheme Implementation Deed with a Scheme consideration of A$0.53/share. Both Carsome (19.9%) and Catcha (9.5%) are required to abstain. Therefore independent shareholders total 70.6% of shares out. This looks done. Link to my insight: ICar (ICQ AU) & Carsome Enter Into Scheme

After Yorkey Optical Intl Cayman (2788 HK), an optical and opto-electronic products manufacturer, announced an Offer, by way of a Scheme, from Asia Optical Co (3019 TT) at $0.88/share - a price that had not been declared final - the salient question attached to this transaction was what would activist investor David Webb, holding at least 5.01%, do? He has been critical in the past of Yorkey's large cash pile and its reluctance to distribute the surplus cash. Webb is also deputy chairman of Hong Kong's Takeovers and Mergers Panel and the Takeovers Appeal Committee, so he's aware of the games people can play. So it should come as no surprise he lifted his holding above 6% on the 18 October, effectively giving him a blocking stake at the Scheme Meeting. Arguably he is long a put at A$0.88/share. I would argue this now needs a bump from Asia Optical otherwise it’s a non-starter. Link to my insight: Yorkey Optical (2788 HK): Webb Bumps... Will Asia Optical? & Yorkey Optical (2788 HK): Time To Buy

There is nothing illegal about the sale of assets when a company is insolvent, or potentially insolvent. But any such sale must be at market value. This is probably where negotiations between Hopson Development (754 HK) and Evergrande (3333 HK) came undone. That. and the two parties were not on the same page. Under the agreement, Hopson would pay the consideration to Evergrande Property Services (6666 HK) pending the netting of monies owed to EPS by Evergrande. But Evergrande wanted the money paid to it direct. Ultimately, the outcome is a good one for Hopson: why would it potentially expose itself to an unwind, or questionable business practice by acquiring assets on the cheap from a technically bankrupt or near-bankrupt entity? If a sale was reversed, does Hopson become a creditor and if so, is it subordinated to other creditors? Link to my insight: Evergrande (3333 HK): Probably Hopson's Best Outcome

After rejecting two earlier proposals, Aussie poles and wires company Spark Infrastructure (SKI AU) entered into a Scheme Implementation Agreement on the 23 August with KKR, Ontario Teachers’ Pension Plan Board, and Public Sector Pension Investment Board. The Offer Price of $2.95 cash per stapled security comprised cash of $2.7675, plus Spark's 1H21 interim distribution of 6.25¢, plus a franked special distribution expected of ~12¢. The interim dividend was announced on the 1 July and went ex on the 7 July, with a record date of the 8 July, therefore the implied Scheme Consideration is A$2.8875/share. The Scheme Booklet has now been dispatched. The Scheme Meeting will be held on the 22 November, with an expected implementation date on the 22 December. This looks done and has not once closed through terms. The Offer remains subject to FIRB approval. Link to my insight: Spark (SKI AU): Scheme Booklet Out. Meeting On The 22 November.

Online shopping rewards platform Cashrewards (CRW AU), which has announced it has entered into a Bid Implementation Deed with ANZ Bank’s innovation and investment arm 1835i Group. The Offer price of A$1.135/share is a 19.5% premium to last close, but a 35% discount to its IPO price last December. Nevertheless, the Offer has unanimous board support, and Andrew Clarke, Alium Capital & M&S Skyleisure, with 39.4%, will tender into the Offer, in the absence of a superior proposal. 1835i currently holds 19%. This looks done. It may jog a competing Offer, but ANZ has an effective lock on the company. Link to my insight: Cashrewards (CRW AU)'s Offer Is 34% Below Last December's IPO

M&A - US

In iClick(ICLK US): PAG & Oasis Shake The Trees, after iClick Interactive Asia Group (ICLK US) announced on the 24 September it had received a preliminary indicative proposal from PAG Pegasus Fund and Oasis Management to acquire all of its outstanding shares for US$6.75 per ADS, in cash, my view was that PAG/Oasis' intention was to shake out potential suitors - including the co-founders - to make a real Offer. iClick has now announced it has received an unsolicited preliminary non-binding indicative offer - dated October 13 - from Infinity Equity Management Co. Ltd. to acquire all of its outstanding shares for US$7.50 per ADS. iClick's board said it has "not had an opportunity to carefully review or evaluate the proposal, or make any decision with respect to the Company's response to the proposal". Arguably the board knows what is considered fair - and this latest Offer probably isn't. Unless co-founders Tang and Hsieh opt to join Infinity in a take-private transaction. Link to my insight: IClick (ICLK US): And Look What Fell.

STUBS

Kirin Holdings (2503 JP)’s share price has underperformed its peers, Asahi Group Holdings (2502 JP) and Sapporo Holdings (2501 JP) by 47.5% and 36.8% respectively during the last 10 months as big foreign funds such as Franklin Resources, Morgan Stanley and Canada Pension Plan Investment Board decided to trim their stakes, amidst human rights violation allegations regarding Kirin’s JV partner in Myanmar, Myanmar Economic Holdings (MEHL). We expect Kirin to settle the matter with MEHL before February 2022. In addition, we expect the consumption of alcoholic beverages to increase following the complete removal of the state of emergency in Japan from the 1st of October 2021. Link to Oshadhi Kumarasiri's insight: Kirin: Holdco Discount Could Unwind As Institutional Investors Return Following Myanmar JV Troubles.

M&A - EUROPE

Playtech Plc (PTEC LN)'s shareholders have won big time at the casino table. On late Sunday 17 October, Playtech, a FTSE 250 white label gambling-technology company, said that it has agreed to a £2.1 billion takeover from Australian slot machine manufacturer Aristocrat Leisure (ALL AU) through its subsidiary Aristocrat (UK) Holdings Ltd. The acquisition is to be effected by means of a scheme of arrangement under Part X of the Isle of Man Companies Act 2006. Aristocrat's offer is its fourth bid, but the first one to be made public. Under the offer, accepting shareholders of Playtech will get 680p/share in cash, cum dividend, a 58% premium to the closing price of 429.20p on Friday 15 October. Link to Jesus Rodriguez Aguilar's insight: Aristocrat/Playtech: Cashing in the Chips.

Infrastructure Investments Fund, a vehicle advised by J.P. Morgan Investment Management, agreed to buy a 60% stake in Falck Renewables SpA (FKR IM) from Falck SpA, at €8.81/share. IIF is paying a premium of 29.2% to the 3-month VWAP. Deal authorization will be subject to Italian Government Golden Power, as the energy sector is deemed strategic. Deal value (for the 60% stake) is c. €1,529 million; the implied equity value is c. €2,548 million and the implied EV is €3,508 million. Multiples: 8x EV/Fwd revenue, vs. the 6.3x median of previous sector transactions and 7.1x at which comps are trading, 16.3x EV/Fwd EBITDA and 59.6x Fwd P/E. Link to Jesus' insight: IIF/Falck Renewables: Acquisition of Majority Stake.

M&A RISK ARB WEEKLY ROUND-UP

  • This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks. I number 46, mostly firm, deals around the region.

INDEX REBALS

OTHER M&A & EVENT UPDATES

CCASS

My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves that are often outside normal market transactions. These may be indicative of share pledges. Or potential takeovers. Or simply help understand volume swings.

Often these moves can easily be explained - the placement of new shares, rights issue, movements subsequent to a takeover, lock-up expiry, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.

Name

% chg

Into

Out of

WAC (8619 HK)16.67%EasyOutside CCASS
Palace (1703 HK)59.57%CanfieldOutside CCASS
Hong Kong Resources Holdings (2882 HK) 13.58%MortonOutside CCASS
Peking University Resources (618 HK) 19.90%SHKDBS
HMVOD (8103 HK)24.29%GSChina Sec
Source: HKEx
The following large movement(s) concern recently listed companies, and therefore are (likely) lock-up related.

Name

% chg

Into

Out of

MicroTech Medical Hangzhou (2235 HK) 28.90%HSBCOutside CCASS
JHBP (Genor) (6998 HK) 21.61%St ChartOutside CCASS
Joy Spreader Interactive Technology (6988 HK) 21.59%GSStd Chart
Source: HKEx

I listen to a bunch of music when writing insights. Here are a handful of tunes, old & new, that piqued my interest during the week: Karl Hector & The Malcouns' Orange Man, Röyksopp's Across The Graveyard, Lovebirds' Want You In My Soul ft. Stee Downes, Velvet Underground's Pale Blue Eyes.

What are you listening to?

Enjoy your Sunday!
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