A turning point?

We may finally have seen a turning point in the under-performance of Value.

The volatility of the Value / Growth ratio in Asia-Pacific surged to 30% on 6 November. The last time we saw a similar level was just over twenty years ago, on 10 April 2000:

This is significant because ... more

Worst performance of value since 1926

We continue to have a strong conviction in a strategy of buying companies at 80-90% discount to NAV, with an expectation of a catalyst for value realisation.

While over the long-term this has proven to be a very effective strategy, it has performed poorly over the past year.

What could be the cause? We believe the global underperformance of the value factor is the main culprit.

We have previously illustrated this using benchmarks from MSCI and Russell Investments. However, to show just how extreme the current moves are, ... more

Congratulations to the new chairman of NBI

Metrica Partners notes the resignation of the chairman of NBI, announced today, and welcomes his successor: https://nbi-shareholders.com/2020/09/22/congratulations-to-the-new-chairman/ ... more

Second letter to NBI Industrial Finance

Metrica today sent a second letter to the chairman of NBI: https://nbi-shareholders.com/2020/09/21/second-letter-to-nbi-board/ ... more

LINE must postpone the squeeze-out EGM

Mr. LEE Hae-Jin Chairman of the Board LINE Corporation JR Shinjuku Miraina Tower 23F 4-1-6 Shinjuku Shinjuku-ku Tokyo 160-0022 Japan

Dear Mr. Lee,

Metrica Partners Pte. Ltd. (“Metrica”) is the manager of, and adviser to multiple funds that own shares in LINE Corp. (“LINE”).

We refer to yesterday’s announcement by LINE, showing that a majority of independent shareholders joined Metrica in refusing to tender their shares into the Joint Tender Offer by SoftBank and NAVER. ... more

Singapore fund manager says Line tender offer price is too low

Bloomberg featured our views on the squeeze-out of LINE Corp shareholders (with no shareholder vote) by SoftBank Group and NAVER Corp.: ... more

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

Engagement update

We have two situations which are public. The first is NBI Industrial Finance in India, a company which owns shares of a major listed cement company worth almost five times its market cap and which carries on almost no other business.

This month, we sent an open letter to the board which we also released to the press and uploaded to a dedicated website (link).

The letter was structured as a list of questions, in line with our policy of first seeking explanations for corporate behaviour before making our own suggestions.

In the first instance, we are asking: ... more

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). ... more

Deal activity still resilient in Asia-Pacific

Recent headlines such as “With M&A Hit, Wall Street Bankers Keep Busy With Stock Sales” (Bloomberg, 28 May), “Bankers fear sustained M&A slump: ‘It’s impossible without face-to-face meetings’” (Financial News, 8 June) and “Pandemic fears grip M&A as deal making slumps to 23-year low in Europe” (MarketWatch, 30 June) suggest a very depressed market for corporate transactions this year.

However, the numbers in Asia-Pacific tell a different story: ... more