“That’s not our primary concern. Our focus is really on delivering long-term, sustainable returns”
— Connie Chan, Temasek International’s head of financial services, on reviving the SGX
Second Chance’s founder, family make privatisation offer
Second Chance Properties’ founder and CEO Mohamed Salleh Marican, through Final Chance Holdings, has made a cash offer of 30 cents to shareholders of the Mainboard-listed company, intending to delist it from the Singapore Exchange S68 (SGX).
The offer price represents a premium of approximately 39.5% over the last transacted price per share of 21.5 cents as of July 9. In a July 10 bourse filing, the offerer says this provides shareholders with a “clean cash exit opportunity” to realise their investment in the company’s shares.
The offerer, Final Chance Holdings, has on its board of directors Mohamed Salleh, his son Amal, and his daughters Nadia, Sofia and Radiah.
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They believe that privatising the company will provide the family and Second Chance with greater management flexibility to manage the business of the group, allowing them to respond to changing market conditions and optimise the use of the company’s management and resources.
Second Chance has a total issued and paid-up share capital of approximately $174.7 million comprising 927,795,798 shares. The offer is unconditional as Mohamed Salleh and his family hold 85.07% of the company’s shares.
According to the offeror, the trading volume of Second Chance’s shares has historically been low, with an average daily trading volume of approximately 11,143 shares, 13,680 shares, 15,935 shares and 41,139 shares for the one-month, three-month, six-month and 12-month periods, respectively, up to and including the last trading day. These represent less than 0.01% of the total issued shares as at July 10.
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Final Chance intends to make the Second Chance its wholly owned subsidiary. Second Chance was listed in 2004, and its core businesses include property investment, retailing of apparel and gold jewellery, as well as investing in financial instruments.
According to Second Chance’s latest quarterly securities portfolio update, the total equity value of the group’s holdings stands at $203 million as of May 31. This is the fair value of its securities ($264 million) less debt ($61 million). From March to May, the group’s securities portfolio saw an unrealised fair value gain of $19.80 million.
As of May 31, the top 10 holdings of the group’s securities portfolio are: China Mobile (5.59%), China Citic Bank (5.16%), Chongqing Rural Commercial Bank (4.52%), China Unicom (Hong Kong) (4.43%), Agricultural Bank of China (4.33%), China Construction Bank Corp (4.07%), Citic (4.03%), Anhui Conch Cement Co (3.82%), China Communications Construction Co (3.52%) and Singapore’s CapitaLand India Trust CY6U (3.33%). — Khairani Afifi Noordin
Reviving SGX ‘not our primary concern’: Temasek
Temasek is aware of calls to revive the Singapore Exchange (SGX), but Temasek International’s head of financial services Connie Chan says their mandate is to generate long-term, sustainable returns, and not to stimulate trading on the local bourse.
“The question around SGX — I think there’s a lot of news around that recently,” says Chan on July 9 in response to questions from The Edge Singapore. “What we want to emphasise is: Our mandate is to generate long-term sustainable returns; that’s the key primary focus for us.”
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Speaking at the release of Temasek’s results for FY2024 ended March 31, Chan says where a portfolio company decides to list is a “multi-factor decision”. “There are going to be pros and cons, depending on which venue, but ultimately, it’s up to the companies themselves to decide.”
Chan adds: “We also have 65 equity partners, [which] look to invest in companies that want to list on the SGX. Therefore, that’s not our primary concern. Our focus is really on delivering long-term, sustainable returns; and then ultimately, where a company decides to list will be up to the company itself.”
As of March 31, over half (53%) of Temasek’s portfolio companies are based in Singapore, with “many of those listed on the SGX”, says Chan. These names, like DBS Group Holdings, PSA, Sembcorp Industries U96 , Singapore Airlines C6L , Singtel and ST Engineering, make up some 40% of Temasek’s total portfolio value of $389 billion as of March 31.
Temasek’s job is to engage portfolio companies “so that they can produce better performance” and “build businesses that are sustainable into the future”, says Temasek International’s deputy CEO Chia Song Hwee.
“We do not actually differentiate whether or not it is a Singapore-based or non-Singapore-based company; the engagement to create value, to enhance shareholders’ value, is consistently applied,” he adds.
Chan says Temasek has achieved liquidity through the public listing of its unlisted assets. Portfolio companies that went public over the past five years include food delivery operators DoorDash and Zomato, solution provider Intapp and biotech company Gracell Biotechnologies.
US-based DoorDash was initially listed on the New York Stock Exchange, before moving to Nasdaq in 2023. Zomato is listed on the National Stock Exchange of India, while China’s Gracell and the US’s Intapp were both listed on the Nasdaq.
Although Temasek did not disclose specific returns from exits taken by its unlisted assets, Chan notes that the firm’s consideration goes beyond making immediate profits, also taking into account the potential appreciation of its portfolio companies after they become public.
One example is Netherlands-based payments company Adyen. Temasek participated in Adyen’s US$250 million funding round in 2014. In 2018, the company debuted on the Eurostar Amsterdam at the offer price of EUR240 apiece. Its share price peaked at EUR2,766 on Aug 24, 2021, and last traded at EUR1,104.20 ($1,613.88) on July 8 — up 162.9% since going public.
“The amount of appreciation from the time Adyen went public to now is actually quite substantial,” says Chan. “So, when we look at our investments, it is not just about divesting once it becomes public. It’s also about [whether] we still see value in the company at the time and if there is a lot of appreciation that can still happen after [the IPO].” — Jovi Ho and Khairani Afifi Noordin
Temasek’s sustainability-aligned investments worth $44 bil; FY2024 emissions below baseline
Temasek’s portfolio value of investments aligned with “sustainable living” reached $44 billion as at March 31 — the first time this figure has been made public.
Of this figure, $38 billion was in “sustainability-focused investments”, like sustainable chemicals company Solugen; and $6 billion was in “climate transition investments”, like Mainboard-listed Sembcorp Industries, says the Singapore-headquartered investment firm on July 9.
However, Temasek is unable to state the prior year’s figures, owing to a “reclassification of selected portfolio companies” into the sustainable living trend as at March 31.
Sustainable living is one of four structural trends Temasek identified in 2016, alongside digitisation, future of consumption and longer lifespans. Since then, the share of investments aligned with sustainable investing has increased from less than 1% of Temasek’s total portfolio value to 12% as at March 31, owing to the reclassification.
This 12% share of Temasek’s total portfolio is inclusive of institutional assets and liabilities. With Temasek ending the financial year in a net cash position, this figure is higher than the $44 billion portfolio value figure, which is net of those items.
Temasek deployed $3 billion into investments aligned to the sustainable living trend in FY2024 ended March 31. These investments include electric vehicle companies Mahindra Electric Automobile in India and BYD in China, sustainable battery solutions provider Ascend Elements in the US, and electrolyser manufacturer Electric Hydrogen in the US.
In May, Temasek partnered Canadian alternative investment manager Brookfield to invest in Neoen, a France-based global renewable energy company.
This is the first time Temasek has issued a separate sustainability report alongside its annual report on its performance. Over FY2024, Temasek’s total portfolio emissions fell some six million tonnes of carbon dioxide equivalent (tCO2e) to 21 million tCO2e as at March 31. This figure reflects Scope 1 and 2 absolute emissions associated with its investment portfolio, and excludes private equity and credit funds.
In another first for Temasek, its total portfolio emissions for a financial year have fallen below the 22 million tCO2e it logged in FY2011, its baseline year. The firm announced in 2019 plans to reach net zero by FY2051, with an interim target to halve emissions from FY2011 to 11 million tCO2e by FY2031.
Temasek also hiked its internal carbon price to US$65/tCO2e ($87.73/tCO2e) on April 1. This is up from US$50/tCO2e in FY2023 and FY2024 and the initial US$42/tCO2e set in 2021. The investment firm “anticipates” that this figure will reach US$100/tCO2e by 2030 “to better assess the potential climate impact” of each investment.
Temasek International’s chief investment officer Rohit Sipahimalani says Temasek reviews its internal carbon price every two years, and even the 2030 target could be raised or lowered based on “forward-looking estimates”.
The internal carbon price is an “actual cost to us”, he adds — one that is tied to incentive schemes for Temasek’s management and staff.
“What we do every year is that if we have returns [on] our cost of capital, there are incentives that are available to management. From that incentive pool, we will deduct the carbon footprint of our portfolio, multiplied by a carbon price. Only that net amount, or a portion of that, is available for distribution. And whatever is deducted, is then deferred to be distributed only when we achieve our goals for 2030,” says Sipahimalani. — Jovi Ho
