Another Rights issue arbitrage : -
The discount seems good but the co. & biz seem dubious. Any investor in it can prbly throw sm light plz.
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Here is a free crowdsourced tool that can help to get a constant and clear stream of new special situation opportunities and keep a track of everything.
Very nascent stage right now but will eventually improve in later versions.
Tool can be accessed at below link :
http://specialsituations.investkaroindia.in/
Credits to our fellow VP member @Tar for making this …
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thanks for developing the much desired tool @Tar.
Entire VP family will remain indebted to you.
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Special Situation(Amalgamation and Demerger)
Mirza International
1)Amalgamation of RTS Fashions Private Limited, the ultimate holding company of Mirza U.K. Limited, with Mirza International Limited
2)Demerger of Domestic Business of Mirza International Limited into a Resulting Company, on mirror shareholding basis
Segmental reported P&L of Mirza International
Product/Geographic segment of sales
Disclosure: Tracking as special situation arbitrage opportunity and no active position currently.
Note: Company is yet to get approval from all creditors and yet to apply for NCLT for further process for demerger please be vary of all potential risk in such special situations.
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Note: These is not a special situation its a opportunity on heavy discount to Book Value(Holding companies at very cheap valuation)
Kurlon Ltd(KL) and Kurlon Enterprises(KEL) these are 2 companies.
Kurlon Enterprises deals with Mattress and other segments here its competitor in listed space is Sheela Foam
Holding Pattern: KL hold 85% stake in KEL and rest 15% is with Motilal Oswal PE firm.
Bio about company KL : KL was incorporated in February 1962 as Karnataka Consumer Products Limited by Mr. T Ramesh U Pai. The name of the company was changed to Kurlon Ltd. in 1995. The company manufactures rubberised coir, foam and spring mattresses foam products and home furnishings through its subsidiary, KEL. The mattress and foam products business of KL was transferred to KEL through a business transfer agreement, effective from April 01, 2014. The Group has manufacturing facilities for rubberised coir in Yeswanthpur (Bangalore), Bhubaneswar and Gwalior, polyurethane foam-manufacturing facility at Dabaspet (Karnataka), Roorkee (Uttarakhand) and Jhagadia (Gujarat), and spring manufacturing facility at Peenya (Bangalore), Jhagadia (Gujarat) and Bhubaneshwar. KL currently holds 85.06% shareholding in KEL.
Kurlon Ltd earns some 8-9 Cr of PAT.
KEL(Financials):
It earns some 75 crores of PAT in FY2020
Valuations: Sheela foam trades at 45PE currently lets take a modest PE of 35 for Kurlon since its not market leader we get valuation of 2600 Crores
Now for Kurlon Ltd company which we are tracking is Maha Rashtra Apex(Listed) it holds 38% in KL
which gives it holding value of 1060Cr we can further give 25-40% holding discount to Maha Rashtra Apex.
Trigger: Motilal Oswal PE firm would need exit someday and Kurlon shares are pretty common in grey market as many are expecting its IPO
About Maharashtra Apex:
Maha Rashtra Apex trades at 120 Cr roughly. It is Manipal Group company with some other subsidiaries in it. It is pretty old NBFC which eventually became a holding company
.
Risk:
1)It can delist itself
2) It can take OFS proceedings in event of IPO and give to group companies leaving minority shareholders empty handed
3)Management has never given dividends to shareholders
Disclosure : Tracking position of 1%in Maha Rashtra Apex at portfolio level from lower levels in last down cycle.
Note: Intention of these post is for study purpose only and not investment advice please be very careful of holding companies risk before entering in such scrips.
Reference article by 2point2capital to understand risk of such companies attaching for reference of interested individuals: Investing In Holding Companies
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Sm recent developments in arb categories : -
- GHCL - Demerger scheme changed. Home textiles division sold to Indo Count. Only spinning part to be demerged now. Filings/details are latest posts on the relevant thread : -
- SCI - This seemed to slip under the radar ( atleast for me). The land\residential assets are demerged into separat co. & govt. also looking to divest the co. to private players. The value of non-core assets itself is slated at 200-230\share. Apart frm this the shipping biz itself is valuable & has seen interest from likes of Vedanta & Fairfax. The last update here is that all demerger approvals were received by mid-Nov & everythng is expected to wrap up by Mar’22.
Requesting @Tar , @shivammitra others to share inputs, or misses here, if any.
Disclosure : - Invested in scrips mentioned purely as arb play.
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You really shouldn’t depend on the non core assets. Just have a look at Hemisphere Properties which has the demerged real estate assets of VSNL. The value of the assets are nearly 7 times its current market cap. It has been over 16 years since the demerger of these assets but nothing has happened till now.
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Here is the complied list of corporate action - Bonus, split, buy back, dividends, right issue or IPO status, are curated in one unified view for the benefit of larger communities, Do check it out Link- Corporate actions - Google Drive
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Glad u brought this up. I had the same concern & hence had done sm further analysis before posting. Below is my understanding to your concern :-
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The TATA comm- Hemisphere demerger broadly happened within a yr’s time-frame after announcement. Prior to that it was a speculation anyways. The arbitrageur jumps into play only after official announcements & filings take place.
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Even in case of Hemisphere properties, the initial out of selling was followed y discount narrowing gradually. I myself rode it from 65-odd to 130 in 6 months time. So, from arbitrageur angle, a play can be to Buy the demerged entity if it gets super discounted. You dont need full realization, only a move from 80% discount to 60% discount will double your investment.
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In this case too, if u discount the assets worth 200+ to 100/share only. You are paying 40-55/share for a residual shipping iz that the govt is looking to sell-off or an industry that is in an up cycle. So thr’s MOS on that side as well.
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The Land & apartment assets here have another kicker. The Shipping ministry entities will have first preference over these. So you have a first ready buyer in place for the assets
The main question arb investor has to focus on is which asset to buy & when. My understanding is it makes sense to buy SCI now and the demerged entity to if it gets whacked to 75-80% discount.
Disclosure: - Same as above
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next listing date is 23Dec
GMR Infra demerger is approved. Last step should be the announcement of record date for the demerger and then the listing.
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Based on previous cases, GMR listing shd take a month or 2 max now. Also attaching screenshot from Neil Bahal’s log to round up demerger listings in FY22 :-
Its of importance bcoz arb players can keep track of these & sometimes the value lies in buying the demerged stubs post listing.
Sharing another idea from a blog written by Ameya bhai : -
He wrote this more from investing point of view, but on purely mathematical arbitrage basis I find this situation on par with IDFC reverse merger. In fact, I will prioritize this over IDFC purely bcoz of mgmt lethargy there.
Disclosure :- Positions in GMR, Piramal, IDFC & Ujjivan as part of special situations Basket.
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Hi everyone,
Can you please help in telling what happens to shares when a demerger is approved like the case in gmr? It will help me gain more knowledge.
Just a newbie trying to learn more.
After demerger is approved, a record date will be fixed. Investors who hold the GMR Infra shares on the record date will only get the demerged shares. There is also a fix swap ratio for allotment of demerged shares. In case of GMR Infra, you will get 1 share of GPUIL(non-airport business) for every 10 shares of GMR Infra. The stock price of GMR infra will adjust on the record date. It takes around 1-2 months after the record date to list the demerged entity shares on the stock exchanges.
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I am a newbie to special situation investing…i wanted to ask folks…if they could suggest any special situation opportunity currently worth digging…though i am aware of forbes and mirza but i think forbes now does not provide much arbitrage and mirza has run much.
Invested in gmr infra and idfcltd recently
Plz guide if possible
Tips Industries
Indiabull real-estate
Piramal Enterprise
Strides - stelis
Aurobindo Pharma- Injectables business
Aarti industries
Invested in Tips & Aarti industries
Watchlist :- Piramal
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A comprehensive list in the replies to this below:
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