Standard Chartered's loss-making private equity unit is planning an investment in a Singaporean crane firm, signalling it is still open to deals even as the business shrinks.
Standard Chartered Private Equity (SCPE) has proposed to buy shares of publicly listed Tat Hong Holdings, the mainboard-based company said yesterday in a filing to the Singapore Exchange.
The London-based bank's buyout unit has offered to pay 50 cents a share, subject to conditions, Tat Hong said in the statement, without specifying the number of shares involved.
That is 28 per cent higher than the year-to-date average price of the firm, which has a market value of $347 million.
The potential investment shows Standard Chartered is still trying to make money from the high-risk, high-return business of private equity, even after chief executive officer Bill Winters moved to wind down the SCPE unit last year.
The division has lost more than US$1 billion (S$1.36 billion) since 2015 as deals went awry across emerging markets, hampering the CEO's efforts to overhaul the bank.
Standard Chartered in London declined to comment.
• Struggled with a decline in economic growth in China and a slump in commodity prices.
• The firm has posted $77 million of combined losses for the past two financial years.
• Shares are down about 66 per cent since 2013.
Tat Hong requested a trading halt in its shares yesterday morning.
SCPE's proposal is subject to conditions including an agreement of terms on a definitive partnership and binding debt financing, and final approval by its investment committee, Tat Hong said in a statement.
Tat Hong is not involved in the discussions relating to the definitive partnership terms, it said.
Executives at SCPE decided late last month to move ahead with the proposal known as Project Titan, people familiar with the discussions said.
Tat Hong's current controlling shareholders, Chwee Cheng & Sons and related parties, who own more than half of the company, would boost their stake to 71 per cent while SCPE would get a 29 per cent stake, the people said, declining to be identified as the talks are private.
Tat Hong, which began in Singapore in the 1970s before expanding across Asia, has struggled with a decline in economic growth in China and a slump in commodity prices, reports show.
The company's revenue has tumbled and it has posted $77 million of combined losses for the past two financial years, according to the reports. The shares are down about 66 per cent since 2013.
SCPE executives have had rough years of their own after spending billions of dollars of Standard Chartered funds on stakes in high-risk companies across the Middle East, Africa and Asia that then lost value.
Mr Winters ousted the head of the business, Mr Joe Stevens, late last year and the bank announced it would begin exiting its investments.
The Standard Chartered division that houses SCPE, known as Principal Finance, was largely responsible for a US$68 million "restructuring" expense in the third quarter of this year, bringing total costs from the division this year to about US$147 million, statements from the London-based bank show.
That adds to combined losses of US$950 million for 2015 and last year.