Singapore managements are increasingly being forced to pay up for taking their companies private as minority investors demand bigger premiums to the depressed market valuations of targets, underscoring a growing trend of shareholder activism in Asia.
With the city-state's nearly 300 small- and micro-cap companies currently trading on average at half the valuations of Asia-Pacific, founders of several firms have lined up plans to
take the companies private, analysts say.
Minority investors traditionally have had little influence with the management of companies in Singapore, with most of the small businesses owned by families. They've also had little support from the bigger institutional investors who mostly steer clear of the smaller companies due to the scarcity of freely-held shares for trading.
All these have meant that managements have generally been able to push through their decisions, including on deals to take their companies private, without much shareholder opposition. But that is changing.
“Minority shareholders are getting more educated and are asking management and boards to be more accountable for their actions,” David Gerald, president of investor body Securities
Investors Association (Singapore), told Reuters.
In January, Singapore Airlines had to sweeten its offer to buy out Tiger Airways (TAHL.SI) by 10 percent after the association weighed on the company to improve its offer.
And this month, the founder of OSIM International, who holds about 68% of the Singapore massage chair maker, launched a $300 million offer to buy out minority shareholders.
But some traders are betting on an improved offer as the stock is trading 4% above its offer price. DBS Vickers Securities' analysts said OSIM's founder would need to increase his price by at least 14% to win shareholders' approval.
“People have been able to look at cash-rich listed corporates acquiring and say ‘hang on, you can afford to pay more’,” said David Smith, head of corporate governance at Aberdeen Asset Management Asia.
“You'll probably see more of this.”
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With the city-state's nearly 300 small- and micro-cap companies currently trading on average at half the valuations of Asia-Pacific, founders of several firms have lined up plans to
take the companies private, analysts say.
Minority investors traditionally have had little influence with the management of companies in Singapore, with most of the small businesses owned by families. They've also had little support from the bigger institutional investors who mostly steer clear of the smaller companies due to the scarcity of freely-held shares for trading.
All these have meant that managements have generally been able to push through their decisions, including on deals to take their companies private, without much shareholder opposition. But that is changing.
“Minority shareholders are getting more educated and are asking management and boards to be more accountable for their actions,” David Gerald, president of investor body Securities
Investors Association (Singapore), told Reuters.
In January, Singapore Airlines had to sweeten its offer to buy out Tiger Airways (TAHL.SI) by 10 percent after the association weighed on the company to improve its offer.
And this month, the founder of OSIM International, who holds about 68% of the Singapore massage chair maker, launched a $300 million offer to buy out minority shareholders.
But some traders are betting on an improved offer as the stock is trading 4% above its offer price. DBS Vickers Securities' analysts said OSIM's founder would need to increase his price by at least 14% to win shareholders' approval.
“People have been able to look at cash-rich listed corporates acquiring and say ‘hang on, you can afford to pay more’,” said David Smith, head of corporate governance at Aberdeen Asset Management Asia.
“You'll probably see more of this.”
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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