TIP: Buy One Get Whole

Normally, Dhipaya Insurance Public Company Limited (TIP) is a far less-liquid stock with low trading volumes of less than 10 million baht a day, but at the end of last week, there has been a rise in speculation, resulting in a 5-8% jump in share price with a trading value of more than 100 million baht.

The phenomenon of TIP has drawn investors’ attention back to insurance stocks. 

This movement occurred after TIP began its restructuring plan for business expansion to establish a holding company under the name “Dhipaya Group Holdings”, which including the making of a tender offer and the application to delist from SET.

The rearranging of TIP will make a tender offer for all securities of TIP at the swap ratio of 1:1, which in this case means one ordinary share in TIP for one ordinary share of Dhipaya Group Holdings…what an interesting idea!

After the Board of Directors has approved the resolution on July 15, 2020, the process of the establishment of a holdings company expected to be completed by July 2020 and by August 10, 2020 will propose to the shareholders meeting again to consider and approve the increase of its registered capital, and the offering of its newly issued securities of Dhipaya Group Holdings in exchange for the securities of TIP. 

Dhipaya Group Holdings will make a tender offer to purchase all ordinary share of TIP within January 2021 and in March 2021 the holding company will be listed on the SET, and TIP will be delisted from the SET.

It had happened before in case of the transformation of Robinson Public Company Limited (ROBINS) (already delisted from SET) to Central Retail Corporation Public Company Limited (CRC). CRC’s announcement of tender offer and share swap has also fueled speculation.

Hopefully, TIP won’t end up like CRC, in which entering the market during the Covid-19 pandemic and stocks have plunged below its IPO price since the first day.