Current trends in Asia-Pacific M&A

We look at the current opportunity set in Asia-Pacific M&A, and how it has changed since the onset of the pandemic.

The figure below shows the cancellation / completion ratio of Asia-Pacific deals going back twenty years. The chart shows how this year has been a huge outlier, with the ratio moving well above two times, compared with a historical range rarely exceeding one. In other words, in 2020, more than two deals have been cancelled for every deal that has completed. This indicates the scale of the disruption in the M&A space this year.

M&A cancel / complete ratio (x)

What does this imply for M&A investment returns for the rest of the year? We think they will be strongly positive for the following reasons: (more…)

By |2020-06-01T10:19:38+08:0027 May 2020|Thought leadership|

A perfect storm

The Covid-19 crisis has created a perfect storm for global M&A:

  • Earnings are falling precipitously. Acquirers are calling off deals by invoking Material Adverse Change (MAC) clauses. Many transactions have either broken or widened out to spreads of 30% to 70%.
  • Even less-risky deals are seeing much wider spreads due to forced de-leveraging. For example, we saw annualised returns in Japan which have been around 2-3% for months blow out to 40%+ at one point.

The disruption in the M&A space has been more severe than during the GFC, as this time the correction has been stunningly abrupt. (more…)

By |2020-06-01T10:19:38+08:003 April 2020|Thought leadership|

Welcome Curtis Man

We are pleased to announce that Curtis Man is joining the team as an Executive Director in charge of investor relations and business development. Curtis was most recently an Executive Director at Pinpoint Asset Management in Hong Kong. Previously he was at LFCC Management and UBS Securities Asia. He has a degree from the Chinese University of Hong Kong.

By |2020-06-01T10:40:44+08:004 March 2020|Metrica news|

The case for tailored relative value

Relative value is a strategy that has, over the years that we have followed it starting in 2007, generally performed well and has produced returns uncorrelated with other strategies and with the broader market. However in last two years the strategy has started to perform poorly for investors. What is the cause?

The figure below shows is an 18-year chart of the MSCI AC Asia ex-Japan Growth and Value indices. Growth tracked Value very closely over the entire period up to 2017. Since then, Growth has significantly outperformed.

MSCI AC Asia Pacific ex-Japan Value and Growth indices, 2002 to present

Why is this? (more…)

By |2020-06-01T10:19:38+08:006 February 2020|Thought leadership|

Welcome Sara Yuan

We are pleased to announce that Sara Yuan has joined the investment team. Sara previously worked on the buy side at Goldman Sachs and State Street. She has masters degrees from Peking University and Princeton University.

By |2020-06-01T10:21:45+08:005 November 2019|Metrica news|

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|

Nomination for “Best New Asian Hedge Fund”

Metrica Asia Event Driven Master Fund, an investment fund managed by Metrica Partners, has been nominated in the category of “Best New Asian Hedge Fund” at the Eurekahedge Asian Hedge Fund Awards 2018.

Damian L. Edwards, Chief Investment Officer of Metrica Partners, said: “We launched this fund in June 2017 when market-neutral investing seemed to be falling out of favour in the face of a relentless climb in global indices. Since then, markets have stalled while our assets under management have nearly tripled, showing that there is strong demand for low-volatility, uncorrelated returns from an investment strategy in which we believe Metrica has few direct competitors.

The team has worked very hard over the last year to build a robust, institutional-quality business, and it is fantastic to see this starting to translate into wider recognition.

I’d like to thank all of our service providers who helped us get to this point, and also to thank Eurekahedge for its work in supporting the alternatives investment industry.”

By |2020-05-31T11:03:00+08:0016 April 2018|Mentions|

First day of trading

We are pleased to announce that the company has successfully completed its first day of trading.

Metrica Partners would like to thank all those that helped us reach this important milestone – Morgan Stanley, SS&C Technologies, Rajah & Tann, Walkers, Dechert, Enfusion, Bloomberg, Lymon, ComplianceAsia, BoardRoom, PwC, Z+N Group, Colin Ng & Partners, Eze Castle Integration, and our founding investors.

By |2020-06-01T10:31:10+08:001 June 2017|Metrica news|
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