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Private equity firms zoom in on Singapore logistics company CWT

Reuters
August 12, 2015
 
Private equity firms KKR, Blackstone and Bain Capital have made informal approaches for buying CWT, people familiar with the matter said, in a deal estimated to value Singapore's largest logistics company at up to S$1.6bn.
 
The talk of private equity's interest comes as CWT's controlling shareholder flagged a potential sale of the business. Shareholders of C&P Holdings, which has a 32 per cent stake in CWT, were considering a strategic review of C&P's business and assets, CWT said last week.
 
CWT has expanded over the past decade by growing its logistics business globally and snapping up a metals trading unit set up by Glencore's founder Marc Rich in 2011.
 
"The logistics business has decent growth rates and that works nicely for sponsors," said one person familiar with the matter. "The logistics play is very active lately."
 
In February, Japan Post Holdings agreed to buy Australia's number-one freight and logistics firm Toll Holdings for A$6.5bn. In the same month, freight carrier Kintetsu World Express agreed to buy Singapore's APL Logistics for $1.2bn. Valuations for both deals were higher than market expectations.
 
CWT could fetch S$1.4bn to S$1.6bn, Maybank Kim Eng Research said in a report. The company currently has a market value of S$1.26bn.
 
The sources, who declined to be identified due to the sensitivity of the situation, said private equity firms had sounded out CWT's shareholders but there had been no formal approach yet.
 
They said companies including Japan Post and Nippon Express could emerge as other suitors for CWT, which employs around 6000 people and reported record revenue and operating profit last year.
 
Japan Post, Nippon Express, KKR, Blackstone, Bain Capital and CWT declined to comment.
 
C&P, in which CWT chairman Loi Kai Meng has a significant holding, acquired shareholding control of the logistics firm in 2004. CWT insiders, including the chairman and his family, own nearly 65 per cent of the company, Thomson Reuters data show.
 
In its statement this week, CWT said there was no assurance of any transaction. Credit Suisse and DBS are assisting C&P's shareholders with the review.
 
Under Singapore rules, any bid for a 30 per cent or more stake in a company triggers a mandatory general offer for the entire firm.
 
"The assets are strategic and there is a lot of interest in the sale," said another person. C&P is expected to reach out to prospective bidders later this year, the person said.
 
An announcement last week from C&P Holdings company secretary Lye Siew Hong Lynda Goh said: “The board of directors of the company wishes to inform shareholders of the company that it has been informed by its controlling shareholder, C&P Holdings, that the shareholders of C&P are considering a strategic review of the business and assets of C&P, which may or may not lead to a transaction involving the company.
 
“Credit Suisse (Singapore) and DBS Bank are assisting the C&P shareholders with the aforesaid strategic review. The board understands from C&P that, at this juncture, neither C&P nor its shareholders have commenced any formal process, nor are they engaged in any exclusive negotiations with any party. Accordingly, there is no assurance that such a strategic review will result in any transaction.
 
“The company will, in compliance with the applicable rules of the listing manual of the Singapore Exchange Securities Trading make further announcements as appropriate. In the meantime, shareholders are advised to exercise caution when dealing in the shares of the company and to refrain from taking any action in respect of their shares which may be prejudicial to their interests.”
 
CWT operates in 90 countries and employs around 6000 people. It reported revenues of S$15.2bn in 2014.