Analysts not ruling out more delistings as shareholders mull stakes

This article is more than 12 months old

Marissa Lee, The Straits Times

Apr 03, 2017 06:00 am

Privatisation fever on the local bourse is not abating, with five takeover bids launched in the first quarter and one more possible offer being finalised.

In contrast, there have been just three new listings on the Singapore Exchange so far this year - Kimly, Dasin Retail Trust and Samurai 2K Aerosol.

Household names no longer feature strongly in the delisting camp after prominent exits last year, which included Tiger Airways and Osim International.

But analysts are not ruling out more high-profile delistings.

The year began with Global Logistic Properties confirming that it was in early talks with various parties on a possible sale of the company as part of a strategic review requested by its largest shareholder, GIC.

Major shareholders of property group United Engineers and telco M1 are also mulling over block sales of their stakes.

Shae Toh Hock (left), Shae Hung Yee (centre) and her husband Siew Boon Liong.

Singapore

Senior V-P’s tip-off helps sister, brother-in-law net $75k on stocks

May 27, 2023

Even if privatisation is not the end game, any buyer scooping up more than 30 per cent of a listed firm's capital would be triggering a compulsory takeover offer under Singapore rules.

It is no surprise that big shareholders have begun to review their stakes, said Mr Justin Tang, director of global special situations at Religare Capital Markets.

"They are likely at a stage where they cannot extract more value from their assets," he said.

"The Straits Times Index is at its highest level since August 2015, so it would be a good time for exits."

Prices of second and third-liner stocks have generally risen too, "so the delisting impetus may be less strong", said Ms Andrea Chee, partner at law firm Shook Lin & Bok.

"But privatisations may continue for specific reasons in certain sectors, such as Oei Siu Hoa's offer for Top Global, which seems primarily motivated by the exposure to Qualifying Certificate penalties for unsold homes," she said.

And there will always be bosses keen to go private because they feel that their business is undervalued.

For many, thin trading liquidity is a serious concern, said Mr Tang.

"If you look at Kingboard Copper Foil, for example, it hardly trades. On a good day, the value traded is maybe $500,000... So the only person who can unlock value is the major shareholder, or a third party who offers to buy the company," he said.