The IPOX® Update 8/10/23

IPOX® 100 U.S. Member Kenvue Joins S&P 500 Post-J&J Exchange Offer

U.S. healthcare giant Johnson & Johnson has propelled Kenvue, a component of the IPOX® 100 U.S. Index, to the S&P 500 Index through a voluntary exchange offer. Originating as an offshoot from J&J in May, Kenvue, a holder of iconic brands such as Listerine, Band-Aid, and Tylenol, witnessed a nearly 2% surge in after-hours trading consequent to this announcement. This transition paves the way for increased investor interest and probable reshuffling between J&J and Kenvue shares among index funds. Details about the company Kenvue will replace in the S&P 500 will be available in an imminent press release. (Source)

Investors Forecast Revival in IPO Market

A recent survey by investment firm KKR indicates optimism regarding the IPO market. A significant 66% of the polled investors anticipate a resurgence in the market for new listings within the upcoming nine months. Interestingly, these investors harbor a preference for IPOs that are priced 20%-30% lower than their listed counterparts. This higher-than-usual discount expectation emanates from past IPOs' underperformance. Moreover, a majority showcases an inclination towards enterprises that are profitable or inching close to it during their listing. There's also a heightened preference for IPOs endorsed by cornerstone or anchor investors, accentuating the prevailing risk aversion. (Source)

Rakuten Ponders IPO for Credit Card Unit

Japanese e-commerce giant Rakuten is contemplating an IPO for its credit card unit as a strategic move to offset losses incurred from its mobile segment. The company plans to join its credit card operations with its smartphone payments division before this potential public offering. Earlier this year, Rakuten showcased its intentions by listing its banking segment on the Tokyo Stock Exchange. Competing against industry rivals such as NTT Docomo, KDDI, and SoftBank, Rakuten's strategic decision could redefine its position in the mobile market landscape. (Source)

Shisha Company AIR Targets UAE-based IPO

AIR, the owner of the globally recognized Al Fakher flavored tobacco brand, has set its sights on an IPO in the UAE next year. Founded in 1999 in Dubai, AIR boasts a commanding 47% global market share in the shisha category. The forthcoming offering has the potential to accumulate a minimum of $800 million, with estimations putting the company's valuation around $4 billion. Citigroup and Morgan Stanley have been selected to oversee this IPO, with Barclays Plc likely to join the roster soon. (Source)

L’Occitane Contemplates European Relisting Amid Hong Kong Exit

French skincare brand L’Occitane is potentially considering an exit from the Hong Kong market, with an eye on a European relisting. Shareholder Reinold Geiger is currently in advanced discussions regarding a take-private deal valuing the firm at $6.5 billion. This trend of European companies in Hong Kong eyeing domestic relistings has been driven by depressed valuations in the region. For example, Italian yacht producer Ferretti SpA recently relisted in Milan after garnering $257 million from a Hong Kong IPO. Similarly, luxury fashion company Prada SpA is also mulling a Milan return from its Hong Kong listing. Analyst Gary Ng from Natixis highlights that the diminishing interest in foreign firms in Hong Kong is offering cost-effective privatization avenues. (Source)

Chinese Appliance Titan Midea Targets Hong Kong Listing

Chinese home appliance behemoth Midea is gearing up for a listing in the Hong Kong market. Enlisting the Bank of America and China International Capital Corp. to facilitate this listing, Midea plans to make its debut either in 2023 or 2024. As part of its listing initiative, the firm might offer up to 10% of itself. This move by Midea is anticipated to be one of Hong Kong's most substantial listings in recent times. Midea, owner of brands like Comfee and Little Swan, also acquired Toshiba's appliance division in 2016. Previously, the company also considered a merger with white-goods manufacturer Electrolux AB. (Source)

Tsinghua Unigroup Ponders Sale or IPO for French Firm Linxens

Chinese tech giant Tsinghua Unigroup is exploring potential avenues, including a sale or IPO, for French smart-card manufacturer Linxens. This anticipated transaction could peg Linxens' value anywhere between €2 billion to €3 billion. There has been evident interest from private equity entities and industry counterparts in Linxens. Notably, Unigroup, which has ties with the Chinese state, recently underwent a takeover amounting to $9 billion post its restructuring phase. A consortium spearheaded by JAC Capital is assessing debt reduction measures for Unigroup. Tsinghua Unigroup had acquired Linxens in 2018, a specialist in microconnectors and RFID antennas. (Source)

Regulatory Shift in China's IPO Documentation Language

The China Securities Regulatory Commission is directing lawyers to employ softer language when discussing China's potential economic risks in IPO registration documents. Legal professionals are being advised to describe China's economy as "evolving" instead of undergoing "adverse changes." Moreover, the regulator is now meticulously inspecting overseas IPO listings, mandating its approval. Listings are prohibited from containing any negative remarks about China's legal framework, business ambiance, or judicial procedures. E-commerce giant Alibaba Group recently mentioned the likelihood of extended court proceedings in its annual report, following the crackdown on their fintech unit Ant Group. Interestingly, the MSCI China Index, showcasing stocks in U.S. and Hong Kong, has plummeted about 50% since its 2021 zenith. (Source)

Australian Childcare Firm Nido Gears Up for IPO

Australian childcare entity Nido is prepaingfor an imminent IPO. The firm aims to raise $66 million USD, targeting a market capitalization of about $165 million USD upon its listing. Brokers, including Canaccord Genuity, are currently engaging potential investors. The buzz suggests a high demand, predominantly attributed to CEO Mathew Edwards's prior success in the sector. Preliminary valuations for Nido indicate a nine times EBITDA or a 13-14 times price-to-earnings ratio. Investors are optimistic about Nido's swift movements, especially in the light of potential future rate hikes that might influence valuations. Edwards, formerly associated with Think Childcare, delivered a commendable 3.2-times return for investors, exclusive of dividends. Currently, Nido supervises 52 centers, boasting average annual revenues of $64.68 million USD. (Source)