SingPost gets nod for Alibaba to raise stake

Singapore

AFTER multiple delays, Chinese e-commerce giant Alibaba's proposal to raise its stake in Singapore Post (SingPost) to above 14 per cent at S$1.74 per share finally looks set to happen, and within the next few months.

But in the wake of SingPost's recent share weakness, a deal that might have seemed sweet for Alibaba a year ago might look a tad expensive now.

The Info-communications Media Development Authority has given the go-ahead for the deal, SingPost said in a Singapore Exchange filing on Thursday evening, adding that the issuance of new shares to Alibaba will raise the latter's shareholding from 10.2 per cent currently to 14.4 per cent.

The group said Alibaba's further investment of S$187.1 million in the group was targeted to be completed by Feb 28, 2017, "in light of the timeline required to obtain the remaining approvals" from SingPost's shareholders at an extraordinary general meeting.

After the investment, Alibaba will remain SingPost's second largest shareholder. The postal and e-commerce group's single largest shareholder is Singtel, which held 494 million shares or roughly 22.83 per cent as at Thursday evening.

The regulatory green light followed several extensions of the long-stop date for the deal, which was first announced in the middle of 2015. Mervyn Lim, group chief financial officer and deputy chief executive officer for corporate services, told a press briefing in May 2016 that regulatory delays had been the main hold-up for Alibaba's proposed stake increase and approvals from regulators such as the Infocomm Development Authority and the Singapore Exchange had been "still pending" at that time.

Alibaba had forked out S$312.5 million in 2014 for 220.1 million shares, or a 10.35 per cent stake at that time, in SingPost at S$1.42 per share. The number of shares Alibaba owned was roughly equivalent to a 10.17 per cent stake out of about 2.16 billion shares outstanding as at Thursday evening.

SingPost later said on July 8, 2015, that Alibaba had agreed to pump in another S$187.1 million to boost its SingPost stake by 107.55 million new shares to a shareholding of about 14.51 per cent at that time, at a price of S$1.74 per share. Shares of SingPost had traded at roughly S$1.88 on July 7 and S$1.90 on July 8, 2015, well above the share placement value.

A SingPost spokesman confirmed on Thursday evening that the number of shares Alibaba was buying in SingPost was unchanged from the figure agreed upon in 2015, implying Alibaba would still be paying S$1.74 per share.

That price represents a 14.5 per cent premium above SingPost's market value of S$1.52 per share as at Thursday before its announcement. The stock has taken a hit over the past year after a series of corporate governance issues were unearthed at its board.

SingPost also said on Thursday that Alibaba's investment of S$86.2 million for a 34 per cent stake in SingPost's logistics subsidiary Quantium Solutions International has been completed.