Delistings : Adapt to market’s needs and raise the governance bar 

LAST week (week of Sep 12) alone, the local stock market witnessed three takeover-cum-privatisation bids – for Moya Holdings, Singapore Medical Group and Memories Group. In all the cases, the offerors intend to delist the respective companies if the bids are successful.

Similarly, earlier this year, Roxy-Pacific, SingHaiyi Group and TTJ Holdings were taken over and delisted, mostly by major shareholders. Many more are said to be in the pipeline. The reasons cited in all the cases are similar – low valuations, poor liquidity and high costs of remaining listed. Many also claim that management needs greater flexibility in running their businesses, which apparently is not possible as a public company.

A few points need to be made. First, markets everywhere , not just Singapore, are facing the same problem. For instance, The Wall Street Journal reported in May that 47 companies from US exchanges delisted in 2021, up from 33 in 2020 and the highest total since 2010. As of May 2022, 26 firms worth US$121b had delisted from the US market since the start of the year. The figure would have been significantly higher if Elon Musk had not backed out of his bid to take Twitter private. Similarly, McKinsey & Co in 2020 reported that the number of publicly-listed companies in the US has fallen from 5,500 in 2000 to about 4,000 in 2020, with most of the exits happening through acquisition and privatisation.