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

Kansai Mirai Financial Group  (7321 JP):  Paying for an Uncertain Future

Kansai Mirai: The Most Interesting Arb In The World

Kansai Mirai: Post Tender - Where To From Here?

🇯🇵 JAPAN MARKET UPDATE • Hit the BoJ Bid and Wait for the Absolute Value Opportunity

Quiddity Advisors

Event-Driven

Kansai Mirai Financial Group I / Event-Driven

The Nikkei carried an article last night suggesting that <a href="https://www.smartkarma.com/entities/resona-holdings-inc" target="_blank" data-smartkarma-citation="entities:6841:1" rel="noopener">Resona Holdings (8308 JP)</a> would seek to take private <a href="https://www.smartkarma.com/entities/kansai-mirai-financial-group" target="_blank" data-smartkarma-citation="entities:26953:1" rel="noopener">Kansai Mirai Financial (7321 JP)</a> which was formed from the merger of <a href="https://www.smartkarma.com/entities/minato-bank-ltd-the" target="_blank" data-smartkarma-citation="entities:1735:1" rel="noopener">Minato Bank (8543 JP)</a>, SMFG-subsidiary <a href="https://www.smartkarma.com/entities/kansai-urban-banking-corp" target="_blank" data-smartkarma-citation="entities:9407:1" rel="noopener">Kansai Urban Banking (8545 JP)</a>, Resona wholly-owned sub Kinki Osaka Bank, back in 2018, listing as Kansai Mirai in April 2018. A year later, under the holdco umbrella, Kansai Urban and Kinki Osaka were merged.  It was always planned that the integration would take years. This was discussed at length in the insights related to <a href="https://www.smartkarma.com/insights/kansai-mirai-the-most-interesting-arb-in-the-world" target="_blank" data-smartkarma-citation="insights:14429" rel="noopener">Kansai Mirai: The Most Interesting Arb In The World</a>. Now it appears that the fact that it remains listed is problematic for governance purposes (highlighted back then, I assure you). The idea now appears to be that the bank needs to be taken in hand to hasten restructuring to lower costs and keep capital in-house rather than paying it out as dividends (to Resona and SMFG as 70% owners). The report suggests that Resona will launch a Tender Offer to take Kansai Mirai private within the month and the stock will be delisted by March where the squeezeout will be a share exchange with Resona Bank shares rather than a cash-out. The <a href="https://www.nikkei.com/article/DGXMZO65998760Z01C20A1EE9000/" target="_blank" rel="noopener">article</a> contains considerable detail.  Resona currently owns 51.2% of the shares outstanding of Kansai Mirai. SMFG has about 21.3% (and group company Cedyna owns 0.95%). Corporates own another 9%. Float is therefore tiny and as long as SMFG tenders into it, the takeover will be successful and minorities can be squeezed out through a merger, quickly approved by Resona. The article suggests that if Resona pays cash for all the shares, that to buy the 49% they don't own of this ¥150bn market cap it would take more than ¥10bn. I expect the article is missing a zero. The last trade before this report was at ¥405 vs Tangible Book Value Per Share of ¥1216. For some investors, this should provide food for thought. The previous deal was done at the wrong price for Minato Bank shareholders. We still do not know the terms here,  but there is a possibility investors will see the terms and say to themselves...<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/170/505/original/MIMITW%20Shake%20Head.gif?1604984190" class="editor-image img-responsive" data-smartkarma-image-id="170505"></figure></section>And there is every possibility this will not be the most interesting arb in the world.But it might still be interesting.More detail below the fold.

The Nikkei carried an article last night suggesting that Resona Holdings (8308 JP) would seek to take private Kansai Mirai Financial (7321 JP) which was formed from the merger of Minato Bank (8543 JP), SMFG-subsidiary Kansai Urban Banking (8545 JP), Resona wholly-owned sub Kinki Osaka Bank, back in 2018, listing as Kansai Mirai in April 2018. A year later, under the holdco umbrella, Kansai Urban and Kinki Osaka were merged.  It was always planned that the integration would take years. This was discussed at length in the insights related to Kansai Mirai: The Most Interesting Arb In The World. Now it appears that the fact that it remains listed is problematic for governance purposes (highlighted back then, I assure you). The idea now appears to be that the bank needs to be taken in hand to hasten restructuring to lower costs and keep capital in-house rather than paying it out as dividends (to Resona and SMFG as 70% owners). The report suggests that Resona will launch a Tender Offer to take Kansai Mirai private within the month and the stock will be delisted by March where the squeezeout will be a share exchange with Resona Bank shares rather than a cash-out. The article contains considerable detail.  Resona currently owns 51.2% of the shares outstanding of Kansai Mirai. SMFG has about 21.3% (and group company Cedyna owns 0.95%). Corporates own another 9%. Float is therefore tiny and as long as SMFG tenders into it, the takeover will be successful and minorities can be squeezed out through a merger, quickly approved by Resona. The article suggests that if Resona pays cash for all the shares, that to buy the 49% they don't own of this ¥150bn market cap it would take more than ¥10bn. I expect the article is missing a zero. The last trade before this report was at ¥405 vs Tangible Book Value Per Share of ¥1216. For some investors, this should provide food for thought. The previous deal was done at the wrong price for Minato Bank shareholders. We still do not know the terms here,  but there is a possibility investors will see the terms and say to themselves...And there is every possibility this will not be the most interesting arb in the world.But it might still be interesting.More detail below the fold. 

Kansai Mirai Financial Group I

Resona To Take Kansai Mirai Private?