Datapulse responds to SGX notice regarding hotel investments and management agreements

IN response to a notice of compliance from the Singapore Exchange Regulation (SGX RegCo) on Friday, Datapulse Technology said on Monday that the basis for its recent investments in two hotels was to further its property business mandate.

It received shareholder approval in March to expand the mandate to include acquisitions and investments in hotels and hospitality assets, whether by way of majority or minority stakes, and whether on a stand-alone basis or in joint venture with selected capital partners.

SGX RegCo's notice of compliance on Friday required Datapulse to disclose its basis for determining how minority stake investments in any hotel are in the interest of minority stakeholders. Datapulse was also directed to vet its hospitality-related agreements with Travelodge Hotels Asia (TLA), the hotel management company engaged to manage Holiday Inn Express Euljiro, a Seoul hotel in which Datapulse acquired a 15 per cent interest.

This was to address concerns that terms of hospitality-related transactions involving ICP Group may not be on normal commercial terms, as TLA is a unit of ICP Group, a company in which Datapulse chairman Aw Cheok Huat is a controlling shareholder and director.

ICP provides hotel management services to certain hotels owned by investment holding company Plenitude, which is also the parent company of Bizcentre Capital. Bizcentre Capital owns the remaining 85 per cent of the Seoul hotel.

SGX RegCo also required Datapulse to justify its acquisition of "hotels with vacant possession" when decisions on the hotel management company appointment have not been executed, or are made solely by its joint venture partner.

Datapulse said on Monday that its relationships with co-investors are governed by the terms and conditions of the shareholders' agreement entered into with the respective co-investor, which include terms stating that decisions on all matters will be subject to majority vote, except for customary reserved matters that require unanimous approval. This also applies when Datapulse's interest in an investment is limited to that of a minority shareholder.

"The company is of the view that the interests of the company and its minority shareholders are aligned to the interests of the co-investors," Datapulse said.

It added that its decision to purchase properties with or without "vacant possession" is a function of the business model elected and the specific circumstances of the properties concerned.

Regarding the requirement to review the terms of any hospitality-related agreement with ICP, Datapulse said: "The management of the company does monitor operations in the companies it has invested in as a matter of course to ensure that its interests are protected, and this includes reviewing the terms of hotel management agreements to ensure that the terms are in line with market parameters."