Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Smartkarma Webinar | NTT's DoCoMo Privatisation - A Long-Term Win?

NTT Buyout of Docomo - Shoring up a Weak Stub?

Softbank Corp (9434) BIGGER Block Offering

NTT To Raise Money Through Asset Sales, Invest, and Buy Back More Stock

Softbank Starts on Its ¥4.5trln Capital Plan - A Model for Bullishness

Quiddity Advisors

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

NTT (Nippon Telegraph & Telephone) (9432 JP)

Friday saw the announcement of a large offering by <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> of <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> shares. 
The dynamics of the offering itself - its internal flow dynamics (who buys? why? when? and who else buys later?) - were discussed in <a href="https://www.smartkarma.com/insights/softbank-corp-9434-bigger-block-offering" target="_blank" data-smartkarma-citation="insights:42689" rel="noopener">Softbank Corp (9434) BIGGER Block Offering</a>. This came a day after it was announced that <a href="https://www.smartkarma.com/entities/kioxia" target="_blank" data-smartkarma-citation="entities:29243:1" rel="noopener">Kioxia (6600 JP)</a> would sell nearly ¥400bn in an IPO to be launched in September 2020, discussed in <a href="https://www.smartkarma.com/insights/kioxia-ipo-the-flow-dynamics" target="_blank" data-smartkarma-citation="insights:42648" rel="noopener">Kioxia IPO - The Flow Dynamics</a>. 
What is not discussed is the significantly large funding trade which has to come.
There is  ¥1.47trln of Softbank Corp shares to be bought at last trade, and if the stock falls to its March low and trades at a 3% discount from there, there is still near ¥1.35trln of stock to buy. There is another ¥378bn of Kioxia to buy at the indicative IPO price. All together it is probably ¥1.7trln of stock to buy. 
That's enough money that it comes from savings rather than sofa cushions and while it is enticing to think that Japan's savers will pull $15bn from bank deposits earning 0.001% a year, what usually needs to happen is investors pull money from shares where they have a profit, and sell those to buy the next new thing.
So Japan's retail savers will have to cough up nearly ¥1.2trln for those two deals, and foreign institutional investors will have to fork over ¥600bn. 
For foreigners, that is less than 0.5% of all Japanese stock held. For retail holders, it is about 1.3% of what they hold. It is big enough to matter. 
So the question is what will they sell and what are trades we can do around that?

Friday saw the announcement of a large offering by Softbank Group (9984 JP) of Softbank Corp (9434 JP) shares. 
The dynamics of the offering itself - its internal flow dynamics (who buys? why? when? and who else buys later?) - were discussed in Softbank Corp (9434) BIGGER Block Offering. This came a day after it was announced that Kioxia (6600 JP) would sell nearly ¥400bn in an IPO to be launched in September 2020, discussed in Kioxia IPO - The Flow Dynamics. 
What is not discussed is the significantly large funding trade which has to come.
There is  ¥1.47trln of Softbank Corp shares to be bought at last trade, and if the stock falls to its March low and trades at a 3% discount from there, there is still near ¥1.35trln of stock to buy. There is another ¥378bn of Kioxia to buy at the indicative IPO price. All together it is probably ¥1.7trln of stock to buy. 
That's enough money that it comes from savings rather than sofa cushions and while it is enticing to think that Japan's savers will pull $15bn from bank deposits earning 0.001% a year, what usually needs to happen is investors pull money from shares where they have a profit, and sell those to buy the next new thing.
So Japan's retail savers will have to cough up nearly ¥1.2trln for those two deals, and foreign institutional investors will have to fork over ¥600bn. 
For foreigners, that is less than 0.5% of all Japanese stock held. For retail holders, it is about 1.3% of what they hold. It is big enough to matter. 
So the question is what will they sell and what are trades we can do around that?

ソフトバンクとキオクシアの「代替取引」は不透明。代わりにNTTとドコモの株を買おう