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Will The Jardine Group Of Companies Ever Simplify Their Ownership Structure?

With the recent implementation of the reduced board lot size from 1,000 units to 100 by the Singapore Exchange, retail investors are now able to easily access and invest in the companies that carry very high share prices.

In Singapore, no other listed companies carry share prices higher than those of Jardine Matheson Holdings Limited (SGX: J36) and Jardine Strategic Holdings Limited (SGX: J37). At the moment, they’re priced at US$64.54 and US$35.10 per share, respectively.

Both companies have done very well for their shareholders over the past decade. Investors who had bought shares in the two companies 10 years ago would be enjoying a total gain of more than 300% for both, assuming their dividends had been reinvested. That’s the great thing about the Jardines.

Yet, at the same time, there’s something about the Jardines which may deter investors – apart from their high share prices – and that is their complex ownership structure.

This is explained in a previous article of mine with the key parts presented below:

Who Owns Who Now?

Jardine Strategic is a conglomerate with interests in many listed companies. The most puzzling feature about the company is that it owns 56% of Jardine Matheson, and Jardine Matheson owns 83% of Jardine Strategic in return. This unique feature brings us to the first key difference between the two.

Larger Exposure To These Companies

Jardine Strategic is the direct major shareholder of HongKong Land (SGX: H78)Dairy Farm International (SGX: D01), Mandarin Oriental (SGX: M04) and Jardine Cycle & Carriage (SGX: C07). Jardine Matheson on the other hand, is only an indirect shareholder of these companies through Jardine Strategic. Therefore, investors who want to have larger exposure to the property, retailing and automotive industry should consider Jardine Strategic ahead of Jardine Matheson.

Jardine Matheson has a 42% interest in Jardine Lloyd Thompson, which is the group’s insurance and other financial services arm. Investing in Jardine Matheson will have a larger exposure to the insurance space compared to Jardine Strategic.”

Confused?

So, Jardine Matheson and Jardine Strategic actually owns big stakes in each other while also having meaningful ownership stakes in many other companies.

In such an instance, assuming we own shares of just Jardine Matheson, working out how much we truly own of it might be quite a tricky calculation. After all, how much of something do we really own if that thing actually owns a part of us in return?

All these complexity and potential confusion can be avoided if the controlling family of the Jardine Group decides to simplify the ownership structure of both Jardine Matheson and Jardine Strategic. The thing is, will that ever happen? Only time will tell.

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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 writer Stanley Lim doesn’t own shares in any companies mentioned.