K1 Ventures

K1 Ventures: According to media news, China Grand Automotive Services Co., the largest automotive dealer in China, has received approval from the HKEX for an IPO. China Grand Auto, which is majority-owned by TPG Capital, is looking to raise USD700m by selling a 15% stake in the company. OSK-DMG estimates that k1 Ventures, which has an effective stake of 1.6% in China Grand Auto, could potentially monetize its stake for SGD90m, and realize gains of some SGD70m. k1 recently sold its rail equipment leasing business in the U.S. for USD143m in net proceeds and paid out a five cent special dividend. The house expects k1 to continue to dish out dividends upon portfolio divestments as management has committed not to make new investments and return excess cash from investment sales. Since 2004, the group has returned some SGD700m to shareholders in capital distributions and dividends from profitable exits. The house rates k1 at Buy with TP $0.23 , based on 20% holdco discount on SOTP valn of $0.29