The Temasek merry go round has started.
Shortly after announcing that LTA will take back the operation of the trains from SMRT, Temasek announced that they will privatize SMRT.
Sometimes we always question whether Temasek is in such a great financial position.
Privatization of SMRT is not a move to enhance shareholders of Temasek because it is a good company. More so, it is a nationalization move to heal a problem by not always being scrutinized.
This means it is no accretive to the shareholders of Temasek.
This morning Temasek and Singtel (Dividend Yield 4.1%) announced that Singtel have entered a conditional share purchase agreement to purchase 21% of InTouch Holdings, which owns Thailand’s AIS and 7.39% of Bharti Airtel for, SG$2.4 billion dollars.
Good Purchase for Singtel Shareholders
Singtel already have stakes in both telecoms and shareholders should be familiar with them. Singtel have a larger stake in Bharti then AIS.
It is more significant to now own a larger stake in AIS. AIS, being Thailand’s largest telecom operator have generated good return on assets based on Singtel past purchase price.
We won’t be sure what is the EV/EBITDA that this is purchased at. It comes at a time that AIS may be reducing their dividends to focus on some capital expenditure.
Bharti has a good story in that, if you look at the country profile that large hedge fund Bridgewater profile as the most competitive on a forward looking basis, India is the country that tops the list.
The entire consideration will be funded by cash.
Temasek in need of money?
Given the timing of this deal, and the ongoing acquisition of SMRT, it begs the question whether Temasek is in need of cash for the purchase.
They should be able to afford privatizing SMRT.
However, we know that at this juncture, if you are a shareholder of Temasek, you wouldn’t be feeling very smug buying fully an asset that is akin to a broken house that you need to fix and selling a cash flow generating good property because it is ‘fully valued’.
If you like materials such as these and would like to enhance your Wealth Management towards have a Wealth Machine that gives You Financial Security and Independence, Subscribe to my List Today Here >>
If you like this do check out the FREE Stock Portfolio Tracker and FREE Dividend Stock Tracker today
Want to read the best articles on Investment Moats? You can read them here >
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.
Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
You can view Kyith's current portfolio here, which uses his Free Google Stock Portfolio Tracker.
His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.
You can read more about Kyith here.
- New 6-Month Singapore T-Bill Yield in Late-April 2024 to Drop to 3.70% (for the Singaporean Savers) - April 18, 2024
- Golden Nuggets from JPMorgan Guide to Retirement 2024. - April 16, 2024
- Be Less Reliant on Banks and Build Stronger Capital Markets by Pushing for Better Shareholder Dividend and Buyback Yield - April 14, 2024