"Its path for September is pretty clear… I think there’s a good chance they could do one more cut in December" –— Robert Kaplan, who left the Fed in October 2021 and is now vice chairman at Goldman Sachs Group Inc, on Fed rate cuts
ThaiBev share swap values FPL at $1.89 per FPL share
Thai Beverage Public Company (ThaiBev), through its indirect wholly-owned subsidiary InterBev Investment (IBIL), has proposed a share swap with TCC Assets. The proposed share swap will involve no cash outlay from IBIL or ThaiBev.
ThaiBev will transfer to TCC Assets all of its 28.78% shareholding in Frasers Property TQ5 (FPL) and its 41.30% shareholding in Fraser and Neave (F&N). Upon completion, ThaiBev will hold 69.61% of F&N, compared to 28.31% previously. TCC Assets will own 86.89% of FPL (up from 58.10%).
The proposed share swap will be executed at a ratio of approximately 1.88 FPL shares for each F&N share. This ratio was determined based on a negotiated price of $1.89 per FPL share and $3.55 per F&N share.
F&N’s valuation range took into account a sum-of-the-parts approach, which valued each of its component businesses by applying their respective peers’ valuation multiples. This was also cross-checked against a standalone discounted cash flow valuation based on ThaiBev’s internal projections of the key businesses under F&N, interviews with management, and equity analyst and industry research reports.
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FPL’s valuation range took into account, among other things, FPL’s net asset value and latest available financial statements as of March 31 and related public disclosures, the latest market valuations of its stakes in its listed REITs, the value of its asset management platform based on precedent transactions, applying a 20%–25% discount to its revalued net asset value, which is in line with previous privatisations of SGX-listed real estate companies by controlling shareholders.
ThaiBev has also received a ruling from the Securities Industry Council of Singapore that its subsidiary IBIL will not be required to make a general offer for F&N under Rule 14.1 of the Singapore Code on Takeovers and Mergers in connection with the proposed share swap.
IBIL and the persons acting in concert with it would not be required to extend a downstream mandatory take-over offer to acquire all the remaining ordinary shares in Fraser & Neave Holdings Bhd not already owned by F&N under Note 3 of paragraph 4.01 of the Rules on Take-overs, Mergers and Compulsory Acquisitions of Malaysia.
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The directors of ThaiBev, who are independent of the proposed share swap, have engaged Deloitte & Touche Corporate Finance as the independent financial adviser about the proposed share swap. — The Edge Singapore
Allianz offers $40.58 per Income share, representing a premium of 37.3% over NAV
Allianz has announced a pre-conditional voluntary cash general offer to acquire at least 51% of the shares of Income Insurance, subject to regulatory approval.
According to a July 17 announcement, Allianz intends to offer $40.58 per share for a total transaction value of approximately $2.2 billion (approximately EUR 1.5 billion) for 51% of the shares in Income Insurance. The offer price represents a premium over Income’s net asset value (NAV) of $29.55 per share of 37.3%.
The Allianz transaction does not mention embedded value since there are differences between European embedded value and traditional embedded value. The Milliman report estimates Income Insurance’s embedded value at $4.357 billion for FY2022, while Allianz values Income Insurance at $4.3 billion.
The proposed transaction will enable Allianz to expand and strengthen its presence in Singapore — an important market for Allianz, given its status as the financial services hub of Southeast Asia.
Allianz is one of the world’s largest global financial services groups. It was founded over 130 years ago and is in nearly 70 countries today. Over the years, the Allianz Group has grown to reach an operating profit of EUR14.7 billion in 2023.
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Present in Asia since 1910, Allianz has a footprint across nine markets in both Life and Health and Property and Casualty, serving nine million customers through a network of 80,000 distributors and 35 distribution partners.
Anusha Thavarajah, regional CEO at Allianz Asia Pacific, says: “We are excited at the prospect of the coming together of Allianz, the No. 1 global insurance brand, and Income Insurance, Singapore’s trusted and leading insurance brand. Asia holds great strategic importance for Allianz, and we are committed to investing in Singapore by partnering with a well-respected local institution.”
NTUC Enterprise Co-operative will continue to retain a substantial stake in Income Insurance. “By integrating Income Insurance’s capabilities in the distribution, partnerships, products, people and Allianz Group’s global and regional resources and expertise, we look forward to taking the insurance landscape of Singapore and Southeast Asia to the next level,” Thavarajah adds.
Allianz intends for Income Insurance to continue its participation in national insurance programmes. In addition, Allianz intends for Income Insurance to continue its social commitment and existing pledge of $100 million over 10 years from 2021 to promote social mobility among the low-income, support seniors’ well-being, and champion environmental causes.
Allianz says the transition for policyholders will be seamless. It adds that it will continue to honour the terms of the existing policies underwritten by Income Insurance, resulting in no impact on customers. Aliianz’s plans include Income Insurance continuing to recognise the labour union and upholding the principles of good labour-management relations as advocated by the tripartite partners in Singapore.
Leveraging Allianz’s global and regional capabilities, the German insurer says it is committed to bringing in the right technology, training, and tools to support the growth of Income Insurance’s distribution channels.
Adeline Sum, CEO of NTUC Enterprise, says: “Allianz’s expertise as a global leader in insurance can strengthen Income Insurance’s competitive position in Singapore and enable Income Insurance to access its regional scale and networks. Secondly, Allianz’s solid track record as a global leader in asset management can enhance Income Insurance’s investment capabilities for the benefit of policyholders. Thirdly, the strength of Allianz’s financial position will provide additional support to Income Insurance where required.
“As stated in the pre-conditional offer announcement, Allianz plans to keep supporting Income Insurance’s continued participation in national insurance programmes and for Income Insurance to continue to recognise the union and uphold the principles of good labour management relations as advocated by the tripartite partners in Singapore. We intend for Income Insurance to continue to be an important, financially profitable and socially responsible business, in line with its enduring purpose of empowering financial well-being for all, which strongly aligns with Allianz’s values.”
Thavarajah adds: “As Singapore and the region benefit from advancements in technology and healthcare and continue to grow in affluence, we firmly believe in the pivotal role of insurance in society to protect and grow their financial security and the well-being of our customers and partners.” — The Edge Singapore
UMS Holdings eyes secondary listing on Malaysia’s stock exchange
According to a release filed on July 17, the board of directors of UMS Holdings 558 intends to seek a secondary listing on the main market of Malaysia’s stock exchange, Bursa Malaysia.
The release notes that this secondary listing will broaden the company’s investor reach and base, and potentially increase the liquidity of its shares through separate trading platforms.
It will also enable UMS to tap additional platforms for future fundraising and provide it with the flexibility to access different equity markets to raise funds after considering investors’ demand and the cost of raising equity funding on the respective stock exchange.
Currently, no application has been made to the Securities Commission Malaysia about the secondary listing.
On July 1, UMS’s wholly-owned subsidiary, Ultimate Manufacturing Solutions, announced that it had invested RM15.23 million ($4.5 million) to acquire a new 5.38-acre, or approximately 235,000 sq ft, of a 60-year leasehold industrial land site in Penang Science Park North, Malaysia.
This news comes amid Malaysia’s ambition to become a semiconductor hub in Southeast Asia. Ongoing geopolitical tensions between the US and China are forcing global supply chains to diversify.
In late May, Prime Minister Anwar Ibrahim pitched the nation as a “neutral and non-aligned location for semiconductor production” and targeted RM500 billion in investment for its semiconductor industry.
UMS held its IPO on the Singapore Exchange S68 in 2001, where it raised $51.6 million via a placement of 40 million new shares at $1.29 each. About a decade later, it attempted a dual listing in Korea to tap the semiconductor ecosystem there. However, a non-Korean company ahead of UMS in the application was caught for fraud, and the dual listing did not go through eventually. — Nicole Lim
Former Fed official Kaplan sees rate cut likely in September
The Federal Reserve is likely to reduce interest rates in September in light of recent progress on inflation, but the move is not likely to mark the beginning of a full-fledged rate-cut cycle, according to the former president of the Fed’s Dallas branch.
“Its path for September is pretty clear,” Robert Kaplan, who left the Fed in October 2021 and is now vice chairman at Goldman Sachs Group Inc, said on July 18. “I think there’s a good chance they could do one more cut in December.”
“That doesn’t mean we’re going to kick off a rate-cutting cycle,” because fiscal deficits are high and energy prices remain high”, he told Bloomberg TV. “It’ll be one meeting at a time.”
Kaplan was speaking after several Fed officials led by Chair Jerome Powell noted in recent weeks that the central bank is making some progress toward lowering inflation to its 2% goal, though they have been vague about the timing of interest rate cuts.
Inflation slowed in the second quarter, with the so-called core consumer price index rising just 0.1% in June, marking the smallest monthly advance since 2021. — Bloomberg
