The co-operative structure remains valid in a society like Singapore as a source of support for the disadvantaged, says Mark Greaves, chairman of ComfortDelGro C52 . “They fulfil an essential need at a time when the market isn’t really doing it in a sufficiently effective way.”
The NTUC Fairprice Co-operative, for example, has a social mission to moderate the cost of living in Singapore.
But markets change, and so do the services and the “background to the products being offered”, says Greaves. “So it’s not, I think, correct to say that one must maintain a co-operative structure in perpetuity. And I think we’re seeing some of that debate now playing out here.”
Matters involving the co-operative structure were at the forefront of Singaporeans’ minds in recent months after German firm Allianz announced in July its plans to buy a majority stake in Income Insurance for some US$1.6 billion ($2.2 billion). Critics — such as Tan Suee Chieh, the former CEO of NTUC Income and NTUC Enterprise — have been vocal in opposing the proposed deal.
NTUC Income was corporatised in January 2022 and became Income Insurance. Similarly, the former NTUC Comfort was a co-operative under NTUC. It was corporatised in 1993, becoming Comfort Transportation. The following year, the company went public on the Singapore Exchange S68 as the Comfort Group.
See also: Read The Edge Singapore’s cover story on ComfortDelGro from March: A comfortable pace of change
ComfortDelGro was formed in 2003 through the merger of two firms: Comfort Group and DelGro Corporation.
Through such changes, what is important is to “try to maintain the values of being ‘all in it together’,” says Greaves. “You will [be] societally supportive, not just of your fellow drivers but also in a community sense, in the sense of the ESG (environmental, social and governance) concept. We’ve carried that over very much into the values that we have in ComfortDelGro; it’s something that we’re very, very committed to, something that I take ultra seriously from [the] board level down.”
See also: CEO interview: How ComfortDelGro continues to drive innovation and return value
40 years on
Greaves may have been appointed chairman in 2020, but his relationship with ComfortDelGro actually dates back more than 40 years. “I first came to Singapore to live in 1980… as a banker with the Rothschild Group. I was a corporate finance banker, so I was doing a lot of work on corporate restructuring. I became involved in a junior capacity in the process that eventually led to the corporatisation and, ultimately, the IPO of Comfort.”
When the Comfort Group was mulling a merger with DelGro in the early 2000s, N M Rothschild & Sons (Singapore) were appointed financial advisers to the independent directors of DelGro.
In addition, former finance minister Goh Keng Swee became Greaves’ chairman at N M Rothschild & Sons (Singapore) following his appointment in 1994. “He stressed this message of integrity throughout and that’s something that I sort of carried with me,” says Greaves.
Hence, Greaves cites a “familiarity with the NTUC Comfort co-operative”. “I’ve seen it develop over that time. I’ve seen it corporatised. I’ve seen it IPO. I’ve seen the challenge of retaining the values of a co-operative type of enterprise, and in particular, the concepts of tripartism and Dr Goh’s emphasis on co-ops being, above all, places of integrity. And I’ve seen that carried forward into what has subsequently become ComfortDelGro.”
In the boardroom
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Greaves joined ComfortDelGro’s board in May 2020, in the thick of the pandemic. Greaves was appointed chairman of the board in April 2023, succeeding the founding chairman Lim Jit Poh.
One of the longest-serving chairpersons in corporate Singapore, Lim is now emeritus chairman of ComfortDelGro. ComfortDelGro saw a “double transition” in a matter of months then, says Greaves, with former deputy CEO Cheng Siak Kian having moved up to the top job on Jan 1, 2023.
“Chairman Lim made it very easy,” says Greaves of his own appointment. “He is meticulous in terms of preparation and planning, and because I’ve been on the board for a number of years, it was relatively painless in isolation… There have been no major hiccups and I’m very blessed to still have access to [Lim] if I need to have it. That helps to make one feel a little bit more comfortable about it all.”
Greaves calls himself a “very engaged chairman at the community level”, and Cheng is a “very capable CEO” who “runs the business in a very capable way”.
But the “limitations” in Singapore remain, he adds. “It is still geographically a small place, and the opportunities in transportation and adjacent businesses are well-known; they’re not going to be any great surprises. But that’s very much our home territory, and we remain completely committed to it and to the communities we serve here.”
So fierce is this commitment that any further spin-off listings may be off the table, despite the group’s operations in 12 countries with a total fleet of over 40,000 vehicles spanning taxis, buses, trains and others.
While secondary listings remain on the board’s agenda for “regular discussion”, the “current answer is no”, says Greaves. “We are committed to being a Singapore-based company, and what we do, what we learn [and] what we implement is what we then take to other markets. We’re very, very pleased to be able to do that as a transportation ambassador for Singapore — a bit like Singapore Airlines C6L is, except that they’re bigger and they don’t have a domestic market at all.”
Granted, ComfortDelGro already has two separately listed subsidiaries in Singapore: bus and rail operator SBS Transit (SBST); and vehicle inspection centre operator Vicom WJP .
ComfortDelGro pulled the plug on an IPO of its Australia subsidiary in November 2021. Lim said then: “We had initially planned to list CDG Australia by the end of the year, subject to prevailing market conditions. The environment has changed somewhat since then, so we are not proceeding with our IPO plans at this time.”
Shareholder value
As a listed entity, ComfortDelGro was dropped from the Straits Times Index in September 2022. Further, a May report by Corporate Monitor Limited, a new research group calling for better corporate governance in Singapore, claims that ComfortDelGro has “struggled” to generate shareholder value, with total shareholder return at an annualised 0.4% over the past decade.
The authors also claim there is a “misalignment” between executive remuneration and company performance, with no disclosures about management’s specific financial targets. They also believe the “unwieldy” corporate structure of ComfortDelGro is too stratified, and simplifying the listed entities within the group would lead to cost savings.
According to Greaves, the report’s authors had shown up at ComfortDelGro’s latest annual general meeting in April, where they had asked similar questions. “We welcome the report; anybody who shows interest in ComfortDelGro is very welcome to do so. We’re delighted that they sent their representative to the AGM.”
On the point about corporate structures, however, Greaves says the group is “not inclined to just chuck money at things we don’t believe are going to actually be of any use to long-term shareholder value”.
Instead, Greaves appeals for critics to take a longer-term view. “If we were a more rapacious organisation, you might close a lot of things down because they are loss-making at a particular point in time, or you just don’t see the benefit in the next quarter. We don’t think quarter by quarter; we think longer term.”
Greaves adds that it would be “irresponsible” of the board not to constantly review these views. “We make a judgement on these things on a regular basis, both Vicom and SBST [are] currently fulfilling their own purposes in an extremely capable way. They’ve got fantastic management and boards, and their own strong shareholder followings. It’s a structure that we do keep looking at, and we’ll keep looking at, but for the time being, it’s just one of the many things on the board’s ‘to keep looking at’ list.”
Governance is a “complex, multi-dimensional thing”, says Greaves. “It’s not just about meeting SGX requirements; it’s not just about meeting climate requirements; it’s about staying ahead of the curve [and] doing more than you’re required to do.”
Growth strategy
ComfortDelGro continues to build its “leading position” in Singapore, the UK, Ireland, Australia, New Zealand and China, says Greaves. He highlights a recent acquisition in February, where the group brought the UK-based “ground transport management and accommodation network specialist” CMAC Group into its fold for GBP80.2 million ($135.4 million).
CMAC calls itself the “go-to provider for both planned and on-demand emergency passenger transport and accommodation solutions”. Its operations cover the UK, France, Spain, Portugal, Greece and the Netherlands, managing disruptions and journeys for close to three million travellers annually on behalf of airlines, ground handlers, train operators and companies.
Through its Suntransfers brand, CMAC also manages private and rideshare transfers to over 500 airports, bus and train stations, and ports worldwide.
CEO Cheng said in a statement that CMAC is “complementary” to ComfortDelGro’s operations in the UK and Europe. There, ComfortDelGro owns and operates taxis and private hire vehicles through its CityFleet Networks in Aberdeen, Chester and Liverpool. It also operates Metroline buses and Westbus coaches in London, Adventure Travel buses and coaches in Wales, as well as the Megabus, Scottish and Irish Citylink inter-city coach services.
Greaves calls the acquisition a “very interesting adjacency that not many people would have thought of”. According to ComfortDelGro, the deal took more than a year to be completed.
The group also fully acquired Australian taxi network operator A2B for some A$165.1 million ($146.4 million), which was completed in April. Before the acquisition, ComfortDelGro and its Australian subsidiary Swan Taxis had held about 9.25% of A2B.
With the addition of more than 9,000 vehicles from the acquisition, ComfortDelGro’s Australia business now has a total fleet of over 12,000 vehicles, including buses, patient transport vehicles and taxis.
Greaves says ComfortDelGro will “continue to invest in future capabilities” to “stay ahead of mega-trends”. Its venture arm, CDG Ventures, was set up in 2019 to support “cutting-edge, innovative technologies or approaches to centuries-old transport issues”, he adds.
Autonomous vehicles, for example, maybe “some way off” in the future, but “they’re already happening”, says Greaves. “Whether they have applications in particular parts of our business, that remains to be seen… Needless to say, you don’t want a lot of headless vehicles running around the roads if they’re not going in the right direction. But, you know, the technologies are improving, and nothing is going to stop that happening, so we need to be there.”
Photos: ComfortDelGro Taxi, Benny Kee/The Edge Singapore
