What Investors Can Look Forward To With TIH’s New Name and New Business Focus

TIH (SGX: T55), previously known as Transpac Industrial Holdings, had just held its extraordinary general meeting on 29 April 2014 to vote on its name change and a switch in its business direction, among other matters.

Under its previous moniker, TIH was an investment company that provided funding to other entities involved with financial services, industrial services, and real estate. Now, as TIH, it wants to be an asset management firm. The key difference here between TIH’s current aim and its previous business is that it used to invest in other entities using its own cash resources; now it wants to be an asset manager that can raise capital from external parties for investing purposes.

More fund raising ahead

In the first step of its transformation, TIH would be absorbing its external fund manager Transpac Capital, which had been managing a portion of the company’s assets. The company is also planning to register for a fund management license to further its development as an asset management outfit. In Asia, the fund management industry has seen some strong growth over the past decade and Singapore has certainly been part of that. It would not be surprising to see TIH wanting to tap into that market in the future.

Finding synergy

According to a 26 May 2014 report from business publication The Edge, TIH has strong potential partners that can lend the company a helping hand in its transformation. For instance, there’s Argyle Street Management (ASM), a 55% owner of TIH. ASM is a fund management company based in Hong Kong that’s managed by TIH’s chairman, Kin Chan.

TIH believes that there’re plenty of opportunities to collaborate with ASM in the future and in fact both parties have already embarked on a co-investment into Batavia Enterprise, a property developer based in Taiwan.

The risks!

A change in business direction for TIH might look promising, especially when it has strong partners. But, investors who are looking to buy shares of the company have to be aware of a pertinent risk.

The company currently has warrants outstanding. If those warrants are fully exercised, it will lead to a 300% increase in TIH’s outstanding share count. That’s a significant figure and poses dilutive-risks for potential investors.

Foolish Summary

In a recent interview with The Edge, TIH’s chairman had compared the company to Value Partners. The latter is a Hong Kong-listed fund management outfit with US$10 billion in assets under management as of April this year. It is one of the largest companies of its kind in Asia.

From such comparisons, it can be seen that TIH does have large ambitions. But, it remains to be seen if the company can meet its lofty goals.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.