IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<a href="https://www.smartkarma.com/entities/soho-china-ltd" target="_blank" data-smartkarma-citation="entities:4123:1" rel="noopener">Soho China Ltd (410 HK)</a> is a real estate company controlled by power couple Pan Shiyi and Zhang Xin. Today, SOHO China entered a trading halt pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers. Since 3 June, SOHO China’ shares have risen 55%. SOHO China has been subject to bid rumours in the recent past. On 11 March 2020, SOHO China confirmed that it is in discussions with overseas financial investors to explore the possibility of a strategic partnership, which may lead to a general offer. The announcement was a reaction to a Reuters report the previous day which claimed that <a href="https://www.smartkarma.com/entities/blackstone-group-inc" target="_blank" data-smartkarma-citation="entities:27166:1" rel="noopener">Blackstone Group (BX US)</a> was looking to privatise SOHO China at HK$6.00 per share. The controlling shareholders (Chairman Pan Shiyi and Chief Executive Zhang Xin) who have a 63.93% stake, planned to retain a small stake in the deal with Blackstone. On 13 August 2020, SOHO China announced that "previous discussions with various investors have now been terminated." A potential deal with Blackstone was derailed as the COVID-19 pandemic made it difficult to assess the business outlook, according to press reports. Subsequently, on 13 November 2020, Hillhouse Capital responded to media rumours by stating it had no interest in taking SOHO China private.As SOHO China is incorporated in the Cayman Islands, we think that a potential offer will be likely structured as a scheme of arrangement. The key conditions precedent are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection).<div class="content-highlight">SOHO China has weathered the COVID-19 pandemic creditably which supports a potential offer. We think that Blackstone is the most likely bidder and the last year’s rumoured offer of HK$6.00 per share remains justifiable.    </div>

Soho China Ltd (410 HK) is a real estate company controlled by power couple Pan Shiyi and Zhang Xin. Today, SOHO China entered a trading halt pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers. Since 3 June, SOHO China’ shares have risen 55%. SOHO China has been subject to bid rumours in the recent past. On 11 March 2020, SOHO China confirmed that it is in discussions with overseas financial investors to explore the possibility of a strategic partnership, which may lead to a general offer. The announcement was a reaction to a Reuters report the previous day which claimed that Blackstone Group (BX US) was looking to privatise SOHO China at HK$6.00 per share. The controlling shareholders (Chairman Pan Shiyi and Chief Executive Zhang Xin) who have a 63.93% stake, planned to retain a small stake in the deal with Blackstone. On 13 August 2020, SOHO China announced that "previous discussions with various investors have now been terminated." A potential deal with Blackstone was derailed as the COVID-19 pandemic made it difficult to assess the business outlook, according to press reports. Subsequently, on 13 November 2020, Hillhouse Capital responded to media rumours by stating it had no interest in taking SOHO China private.As SOHO China is incorporated in the Cayman Islands, we think that a potential offer will be likely structured as a scheme of arrangement. The key conditions precedent are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection).SOHO China has weathered the COVID-19 pandemic creditably which supports a potential offer. We think that Blackstone is the most likely bidder and the last year’s rumoured offer of HK$6.00 per share remains justifiable.    

SOHO China: After Many False Starts, Finally an Offer?