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Metrica Partners will not tender into the LINE Joint Tender Offer and urges other shareholders to consider following

Metrica Partners Pte. Ltd. (“Metrica”) is the manager of, and adviser to multiple funds (the “Metrica funds”) that own shares in LINE Corp. (“LINE”, Securities Code: 3938). LINE is currently the subject of a tender offer (“the Joint Tender Offer”) by SoftBank Corp. (“SoftBank”, Securities Code: 9434) and NAVER Corporation (‘NAVER”, Securities Code: 035420), which is to be followed by a business integration with Z Holdings (Securities Code: 4689) (the “Business Integration”).

Metrica will not be tendering the shares held by the Metrica Funds into the Joint Tender Offer, and furthermore, it intends to dissent to the subsequent Share Consolidation and exercise its appraisal rights:

  • Metrica considers that the procedures leading up to the LINE Board’s decision to recommend the Joint Tender Offer fall short of the required standard of fairness.
    • The Special Committee has not demonstrated a sufficient degree of independence from the transaction.
    • One of the acquirers ultimately ends up with much higher value from the Business Integration than the price offered to minority shareholders of LINE. The excess value is a tangential benefit deriving more from financial engineering rather than from synergies related to the Business Integration, in Metrica’s view.
    • The other acquirer is a major client of the financial advisor, which may affect the perceived independence of its valuation of the target company.
    • The deal is missing a minimum acceptance condition, depriving shareholders of an important opportunity to exercise their rights.
  • Metrica believes that the Joint Tender Offer price of JPY 5,380 is inadequate.
    • It represents a very low premium when compared with historical precedents.
    • It is below the mid-point of the financial advisor’s DCF valuation, which does not incorporate any projected synergies.
    • The valuation has not been updated to reflect the pandemic’s favourable impact on LINE’s business, nor the substantial increase in comparable company valuation multiples.
    • The joint acquirers are privatising the company just before the point at which it turns profitable on an operating basis, according to management’s own forecasts.

Metrica’s reasoning behind the above conclusions is as follows: (more…)

By |2020-08-25T09:14:58+08:0024 August 2020|Open letters|

Metrica Partners sends letter to board of NBI Industrial Finance

https://www.businesswire.com/news/home/20200719005001/en/Metrica-Partners-Sends-Letter-Board-NBI-Industrial

  • Requesting explanation for zero dividend payout despite extremely strong balance sheet
  • Asking why company persists with a structure that causes double taxation for shareholders
  • Seeking to understand purpose of listing with almost 95% of assets in Shree Cement shares

SINGAPORE–(BUSINESS WIRE)–Metrica Partners Pte. Ltd. (“Metrica”) manages investment funds that are among the largest minority shareholders of NBI Industrial Finance Co. Ltd. (“NBI”, NSE: NBIFIN, Bloomberg: NBI IN).

NBI is a Shree Cement (“Shree”, NSE: SHREECEM, Bloomberg: SRCM IN) group company and shares its headquarters with Shree. According to Metrica’s research, almost 95% of NBI’s assets are represented by its holding in Shree and NBI has no debt. (more…)

By |2020-07-20T11:18:14+08:0020 July 2020|Open letters|

Aveo can unlock 70% upside by addressing its unique ownership structure

  • Aveo is substantially undervalued because it has a foreign-listed corporate as its major shareholder, according to Metrica Partners
  • Restructuring the relationship could attract more institutional investors and boost Aveo’s share price by up to 70%
  • Aveo – a leading owner, operator and manager of retirement communities in Australia – is 22.7% owned by Malaysia-listed Mulpha International Bhd

August 23, 2018 09:00 PM Eastern Daylight Time

SINGAPORE–(BUSINESS WIRE)–Aveo Group (“Aveo”, ASX:AOG) is set to announce the advisor for its strategic review on 24th August. Metrica Partners (“Metrica”) urges Aveo to seize this opportunity to address its relationship with major shareholder Mulpha International (“Mulpha”, Bursa Malaysia: 3905).

Metrica agrees that Aveo should not trade at a 41% discount to net tangible assets (NTA) given the company’s growth prospects. However, the factors cited by management – concerns about the residential market and regulatory risks – affect the whole industry and do not explain Aveo’s persistent discount to its peers, which on average trade at NTA or higher. This represents 70% upside for Aveo’s share price.

According to Metrica’s research, Aveo is the only ASX-listed retirement business substantially held by a foreign-listed corporation – namely Malaysia-listed Mulpha International Bhd, which owns 22.7%. Aveo’s chairman, Lee Seng Huang, is also the controlling shareholder of Mulpha.

Aveo’s pattern of ownership is rarely seen on the ASX or other developed markets according to Metrica’s research. It creates, rightly or wrongly, an overhang on the stock in terms of perceptions that Mulpha’s interests are not aligned with other shareholders. Consequently, Mulpha’s stake has crowded out the type of investors Aveo needs – large institutions who would otherwise be attracted by the strong growth prospects for Aveo’s business. This is evidenced by the fact that other retirement sector stocks show far higher institutional ownership. According to Metrica, Aveo’s ownership structure explains its depressed valuation relative to its peers.

Aveo’s parent Mulpha is even more undervalued and trades at a 78% discount to NTA, according to Metrica. Its stake in Aveo alone is worth more (RM917 million, A$304 million) than its market capitalization (RM687 million, A$228 million). Mulpha also has RMD2,190 million (A$727 million) in other net assets. Funds managed by Metrica have significant exposure to both Aveo and Mulpha.

Metrica believes that, as part of its strategic review, Aveo must address its relationship with Mulpha and that both parties must consider spinning off Mulpha’s stake in Aveo to its shareholders.

Damian L. Edwards, Chief Investment Officer of Metrica Partners, said: “We are very pleased with Aveo’s achievement of its long-term ROA targets as highlighted in its FY18 results. However, we don’t think that the market will reward Aveo’s efforts until the overhang from the Mulpha stake is addressed. Aveo and Mulpha can create substantial value for their shareholders by restructuring this relationship now.

About Metrica:

Metrica Partners Pte. Ltd. is a Singapore-based fund manager founded in 2016. Investors in Metrica’s funds include foundations, family offices, funds-of-funds, accredited individuals and Metrica employees. Metrica promotes good corporate governance and works with its portfolio companies to enhance shareholder value. More information is available at www.metricapartners.com.

Prices as of 22nd August.

Contacts

For Media
Metrica Partners Pte. Ltd.
David Mulvenna, +65 6904 1992

By |2020-06-01T10:24:08+08:0024 August 2018|Open letters|
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