SingPost shareholders vote overwhelmingly in favour of A$1 billion sale of Australian business

[SINGAPORE] Singapore Post (SingPost) shareholders on Thursday (Mar 13) voted in favour of the sale of the Australian logistics business Freight Management Holdings (FMH).

Of the shareholders who voted at the extraordinary general meeting, 99.9 per cent supported the divestment, which is material in terms of the deal value, as well as the contributions that the Australian unit has been making to the group.

The sale of the business – at an enterprise value of A$1 billion (S$856.5 million) – to Australian private equity firm Pacific Equity Partners will reap A$775.9 million in gross proceeds and a capital gain of about S$289.5 million.

SingPost’s board said that it will consider paying a special dividend with the proceeds, which will also be deployed towards paying down the debt taken to acquire the logistics business in Australia, as well as to use as capital for future investments.

At the meeting, it also announced plans to invest S$30 million to install a new, fully automated e-commerce parcel sorting equipment at its regional e-commerce logistics hub in Tampines by mid-2026. This will centralise all its e-commerce parcel sorting into one site.

It will also vacate some 83,000 square feet of lettable industrial space at the SingPost Centre in Paya Lebar, potentially opening up more leasing opportunities there.

The new equipment at the Tampines facility will increase its sorting capacity for small e-commerce parcels to 300,000 a day, up from the present 100,000.

Currently, the group’s postal and e-commerce parcel sorting is managed in Tampines and at the SingPost Centre.

The postal service provider intends to consolidate mail and parcel operations under one roof in Tampines eventually, thereby freeing up more lettable space at the SingPost Centre.

Simon Israel, SingPost chairman, said: “Singapore’s e-commerce logistics market is fragmented. By leveraging our infrastructure, SingPost could play the role of an industry consolidator, opening our historically closed networks to partnerships or undertaking services for other parties in the industry.”

He added that with the divestment of the Australian business approved, the group will now focus on resetting its strategy, considering that FMH has been a key earnings driver in recent years.

On some shareholders’ concern about SingPost not being able to find accretive ventures, Israel said: “If the board doesn’t believe that there are compelling opportunities, (it) will probably choose to return the money to the shareholders, and the shareholders can make their own choices about where they invest their money.”

The sale of FMH leaves the group with the Singapore postal and e-commerce logistics business and the international e-commerce logistics business – both are facing competitive or structural challenges.

The group’s latest update showed that its Singapore and international businesses’ operating costs outstripped the rise in revenue.

This resulted in a 23.8 per cent year-on-year decline in group operating profit to S$21.1 million in the third quarter ended December.

In contrast, the contribution from its Australian business rose in terms of revenue and operating profit, though it was largely due to the consolidation of Border Express into FMH post-acquisition.

The national postal service provider will also kickstart the formal process of finding a replacement for its group chief executive officer.

The position was vacated when Vincent Phang, along with then group chief financial officer Vincent Yik and CEO of its international business unit Li Yu, were fired in December over their alleged mishandling of an investigation into a whistle-blower’s report.

SingPost shares settled 2.7 per cent or S$0.015 higher at S$0.565 on Thursday, after the proceedings ended.