SINGAPORE (BLOOMBERG) - Metro Holdings said it is evaluating investment opportunities to deploy cash after it was urged last week by an activist hedge fund to use excess reserves to boost its dividend.
The retailer and real estate developer said its current net cash position is a recent occurrence due to the recent divestment of properties over the last one to two financial years, according to a statement on Tuesday (Oct 11) in response to an open letter from activist hedge fund Quarz Capital Management.
There are opportunities to reinvest capital and Metro continues to carefully evaluate a pipeline of projects, taking into consideration property cycles across different geographies, Metro said in the letter.
Metro expects its net cash levels to decline, as it capitalises on property development and investment opportunities when they materialise. Insufficient cash for potential deployment would affect Metro's ability to build future income streams through recycling the cash.
Metro's net cash position has risen to S$479 million at the end of June, attributable to the inflow of proceeds from projects, such as EC Mall in Beijing, which it sold after attaining full occupancy and stable rental income, Metro said.
Metro's net cash holdings are high compared with other companies listed on the Singapore stock exchange, and account for more than half its market capitalisation, Quarz said in its letter to the management and board.