Delisting talk hots up after Osim offer

The Singapore Exchange says there is still a diverse range of local companies listed here, presenting good investment opportunities.
The Singapore Exchange says there is still a diverse range of local companies listed here, presenting good investment opportunities.ST PHOTO: LIM YAOHUI

But SGX says 58% of listings from 2011 were S'pore firms, as opposed to 46% of delistings

The $310 million buyout offer for Osim International announced by founder Ron Sim this week has sparked speculation as to which local firm will be next to delist from the Singapore Exchange.

There are plenty of candidates being tipped: DBS Group Research recently nominated PACC Offshore, Pacific Radiance, Pan-United, Tat Hong and Banyan Tree - all headquartered here - as potential privatisation or takeover targets.

There is also delisting speculation swirling around property companiessuch as Wing Tai Holdings and Ho Bee Land. "The delisting of local brand names does deprive investors of the opportunity to invest in them and participate in their growth stories," said EY Asean and Singapore managing partner Max Loh, without naming any particular counter.

The Singapore Exchange told The Straits Times that the number of new listings on the stock market over the past five years has exceeded the number of companies that have delisted.

It added that local firms - those with "the principal place of business being in Singapore" - are still well-represented.

The SGX noted that 88 of 152 listings from 2011 to now - or nearly 58 per cent - were Singapore companies while about 46 per cent of the 129 delistings - or 59 firms - were also local firms.

Losing a high-profile firm like Osim would be a blow but other household names have delisted in the past, including Popular Holdings, Keppel Land, SC Global, Asia Pacific Breweries and CK Tang.

Singapore-based Tiger Airways is in the process of being privatised while container shipping and logistics services firm NOL is set to be acquired by French container shipping giant CMA CGM.

Despite the loss of several home-grown names from the bourse, the SGX said there is still a diverse range of local companies listed here, presenting good investment opportunities. "Singapore companies are important to us, as reflected in the mix of our listed companies, with approximately 60 per cent Singapore companies (nearly 500 companies) and 40 per cent overseas companies" the SGX added.

It has always been engaging various stakeholders across the industry to promote the benefits of listing on the SGX and to help local firms "ready themselves before coming to the public market".

Efforts include working with with Spring Singapore to help firms strengthen capabilities in areas such as corporate governance, risk and financial management and internal controls.

Local firms listed here recently included Secura and GS Holdings, both of which made their debut on the Catalist in January.

While some may see a spate of Singapore firms delisting from the SGX as a concern, experts say it is not unusual in a well-functioning market.

"The spike in delisting can indicate a sign of healthy liquidity and M&A (merger and acquisition) activity, which may not hurt the market's vibrancy," said Dr Ernest Kan, chief of operations for clients and markets at Deloitte Singapore.

Dr Kan added that Singapore-listed firms are seen to have in place better management and governance, which make them attractive targets for global companies seeking to expand in Asia.

OCBC Investment Research said low share valuations and a lack of trading liquidity are some key considerations when firms decide to take themselves off the bourse.

"There are many factors for delisting, including providing management with more flexibility to run or expand the business," added OCBC Investment Research head Carmen Lee.

Analysts said companies, especially cash-rich ones, may also choose to delist if there is no need to access the market for capital. Listing costs and regulatory requirements have also been cited as reasons why companies delist.

However, EY's Mr Loh said that they are "never major inhibitors" in firms seeking or maintaining a listing. "Listing costs and regulatory procedures in Singapore are not overly onerous when benchmarked to other stock exchanges in that it strikes a balance between ensuring quality and ease of achieving and maintaining a listing."

According to the SGX website, a mainboard-listed firm is subject to an annual listing fee of up to $150,000, and up to $50,000 on the Catalist. This excludes other professional fees such as for audit and legal services, as well as director's fees, which are not dictated by the bourse.

A version of this article appeared in the print edition of The Straits Times on March 12, 2016, with the headline 'Delisting talk hots up after Osim offer'. Print Edition | Subscribe