What Stocks In Singapore May Be The Next Potential Buyout Targets?

There have been a slew of privatisation exercises happening in Singapore’s stock market over the past few years.

Some recent examples of successful takeovers include Singapore Airlines Ltd’s (SGX: C6L) acquisition of Tiger Airways earlier this year and Keppel Corporation Limited’s (SGX: BN4) privatisation of Keppel Land in 2015.

One on-going privatisation attempt is that involving OSIM International Ltd (SGX: O23). The company’s founder and leader, Ron Sim, announced back in March that he wants to delist the company from Singapore’s stock market.

With all these deals going on, it is interesting – even from the perspective of an observer – to wonder which companies might be the next potential buyout target.

The recent buyout deals had involved mostly either listed companies that are subsidiaries of other companies (Singapore Airlines and Keppel Corporation were major shareholders of Tigerair and Keppel Land, respectively, before their respective privatisations), or companies that have an individual shareholder with a huge stake (Ron Sim had control of over two-thirds of OSIM’s shares prior to launching his takeover attempt).

Here are some other companies in Singapore’s stock market that have similar characteristics and billion-dollar market capitalisations:

1) UOB-Kay Hian Holdings Limited (SGX: U10) and Great Eastern Holding Limited (SGX: G07) are listed subsidiaries of banking giants United Overseas Ltd (SGX: U11) and Oversea-Chinese Banking Corp Limited (SGX: O39), respectively. Will it make sense for the parents to take the subsidiaries private?

2) Yanlord Land Group Limited’s (SGX: Z25) chairman and chief executive, Zhong Sheng Jian, has a 67.7% stake in the company as of 11 March 2016. In the case of Sheng Siong Group Ltd (SGX: OV8), its founders, Lim Hock Eng, Lim Hock Chee, and Lim Hock Leng, are siblings and they collectively hold over half of the company’s shares. Would it make sense for these big shareholders to consider taking their companies private?

The questions are interesting in that they force us to think from the point of view of a company’s controlling shareholder.

Sometimes, a company will look very different in the eyes of a minority shareholder as compared to that of a majority shareholder. It is important to look at a company from the point of views of both parties in order for us to grow as an individual investor. It is also critical because it may help us better understand the possible actions that majority shareholders of a company may take.

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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 owns Keppel Corporation Limited.