Singapore Exchange struggles to keep companies from delisting

ASUKA KONDO, NQN staff writer

SINGAPORE -- The Singapore stock market is struggling to keep its claim as one of the essential exchange hubs of Asia, as several prominent stocks have recently delisted from the exchange.

        CapitaLand, Southeast Asia' s biggest property developer, announced April 14 a plan to buy out minority shareholders in its shopping mall operating unit, CapitaMalls Asia, and delist the subsidiary from the Singapore Exchange (SGX).

        The announcement sent CapitaLand' s stock up 11% and CapitaMalls up 23% by the end of the month. The news also inspired speculative buying across the real estate sector on expectations of similar buyouts.

        The day after the CapitaLand announcement, the founder of Hotel Properties, which runs a luxury hotel in the heart of Singapore, offered to buy out the company. The founder, a renowned hotel tycoon, has partnered with a Hong Kong real estate group for the bid and will delist the hotel operator if enough shares are tendered by shareholders.

      This spate of buyout bids by parent companies or their managements started with United Industrial, a property developer, which announced a plan in February to acquire all stakes in its subsidiary, Singapore Land.

      This was followed in March by the management of Fragrance Group, a property developer, offering to buy out its own subsidiary, Global Premium Hotels.

More out than in

CapitaLand said it will delist CapitaMalls to simplify its corporate structure and use its management resources more flexibly. Other buyout bids have cited similar reasons, in addition to the low liquidity seen in the shares of subsidiaries.

        But trading led by investors seeking to profit from price rises in connection with delistings is not good for a stock exchange. Namely, minority shareholders have almost no choice but to tender their holdings. CapitaLand' s offered price for CapitaMalls is 1.2 times the company' s net assets per share, down from 1.55 times three years ago when the subsidiary was listed.

        The SGX can weather such delistings as long as trading on the exchange remains healthy. But the SGX is losing companies. As of March, there were 767 companies listed on the exchange. Three years ago, it had 785. And debuts per month rarely outnumber issues removed from the exchange of late.