Local market languishes with privatisations

IT is only April, but with the privatisation of CapitaMalls Asia, Singapore Land and a cash offer for Hotel Properties Limited, the Singapore market is losing some major property plays. Furthermore, a slew of other solid companies, especially in the exciting food and beverage sector, have also been delisted in recent years. Tiger beer maker Asia Pacific Breweries went to Dutch brewer Heineken. Brand's Chicken Essence maker Cerebos Pacific went to Japanese firm Suntory Holdings. Instant coffee maker Viz Branz was taken private. Even homegrown bar chain Harry's Holdings went to a private equity fund less than two years after being listed on Catalist.

Other venerable companies such as WBL Corporation and Guthrie GTS are also gone. WBL, a conglomerate known as Wearnes, was taken over by United Engineers. Guthrie GTS, a property and engineering group which partly owns Jurong Point mall, was taken private by its Indonesian owners. In the commodities space, Olam International is being taken over by a unit of Temasek Holdings. Coal miner Sakari Resources went to Thailand's state-owned energy giant PTT. Others such as sticker printer Adampak and heavy machinery distributor Kian Ann Engineering have also been delisted. The question may very well be asked: what companies are being brought in to replace them, and will they provide long-term value for shareholders? If there are no new ideas, the local market will continue to languish.

The latest offer by property giant CapitaLand to take subsidiary CapitaMalls Asia private is not necessarily bad news, for investors can still invest in CapitaLand itself. The company, like others in the beaten-down property sector, is trading at a 30-40 per cent discount to its revised net asset value as estimated by analysts. Still, the rash of privatisation is telling. It's happening because of mediocre valuations and a lack of investor interest.