Temasek unit buys 6.2% stake in YHI for $18m
(2004-03-03)

Temasek unit buys 6.2% stake in YHI for $18m

SERENA NG

SINGAPORE's investment company Temasek Holdings has paid $18 million for a 6.16 per cent stake in automotive products distributor and manufacturer YHI International, which last week reported a 28 per cent jump in net profit for the year 2003 to $14.6 million.


Mr Tay: hopes Temasek's strong global network and connections will benefit YHI International

Temasek's wholly owned subsidiary Seletar Investments bought 15 million YHI shares at $1.20 apiece from major shareholder YHI Holdings Pte Ltd, the investment holding company of the mainboard-listed group's controlling Tay family.

The transaction price represented a 7 per cent discount to YHI's closing price of $1.29 yesterday, which was six cents down from Monday's close.

YHI, which distributes products like Yokohama tyres and Hitachi industrial batteries in China, was listed in July last year.

In a statement yesterday, Temasek's managing director of Strategic Development (Asean Investments) Tow Heng Tan said the investment in YHI 'is in line with our interest in promising companies with good growth potential'.

Contacted yesterday, YHI's managing director Richard Tay told BT that Temasek was introduced to his firm through DBS Vickers Securities.

'Since last July when we listed, Temasek has been interested in our company. We did a presentation to them and went through several rounds of discussions, and last week, after our full-year results came out, we reached a deal,' he said.

'I think they feel we have growth potential because we have been in China for 12 years now and have a strong distribution network as well as good brands, plus a manufacturing plant in Shanghai that exports products to the global market.'

YHI's 2003 earnings growth was achieved on the back of a 25 per cent rise in revenue to $220.7 million and was boosted mainly by higher production and sales of alloy wheels made at its Shanghai plant.

Besides the sale of 15 million shares to Temasek yesterday, YHI Holdings sold another five million shares to retail investors through GK Goh, Mr Tay said.

He added that the group's shareholder list as at end-January showed that just 6.5 per cent of its issued capital was in the hands of retail investors, which could have been why daily trading volume of YHI's shares was relatively low over the past few weeks.

Together, the private vendor sales reduced YHI Holdings' stake in the group to 61.8 per cent from 70.03 per cent.

Yesterday, Mr Tay also expressed hopes that YHI International will benefit from ties with its newest substantial shareholder. 'Temasek has a strong global network and their connections can help us in the future, so we hope to work closely with them and that their strong links can help us to grow further in the automotive industry worldwide.'

The purchase of the YHI stake comes shortly after Deputy Prime Minister Lee Hsien Loong on Friday revealed that Temasek fully or partially divested stakes in 12 Singapore companies last year. These included stakes in Hyflux and Autron Corp that were acquired during the same year and then partially sold down to below 5 per cent not long after.

Mr Lee, who is also Finance Minister, said last week that Temasek's role is to grow companies with international or regional potential, provide stewardship for companies that the government needs to own for strategic reasons, and divest those which have no international growth potential or are no longer strategic.

Yesterday, a Temasek spokeswoman told BT there is technically no difference in whether Temasek holds a stake of 5, 9 or 3 per cent in a company whose long-term growth potential it wishes to participate in. Small adjustments of its stakes, she added, could be due to portfolio rebalancing or profit-taking to realise some investment returns.

  
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