Singapore Post (Singpost) has invested A$4.3 million ($3.32 million) in cash for a 30 per cent stake in Australian e-commerce company Hubbed Holdings. The acquisition was indirectly made via wholly-owned subsidiary Quantium Solutions (Australia).
Hubbed, as of 30 April 2015, possessed a net asset value of A$0.94 million. David Mclean, its CEO and founder, is a former banker and Microsoft executive.
Its main office is located in the Balmain district of Sydney and it operates in the B2B logistics segment, specifically retail commerce. Part of its operations involved partnering with and integrating local newsagent shops into their supply chain, given their role as community hubs.
This allows them to work with SMEs and integrate themselves into existing communities and networks, by serving the delivery needs of businesses and local consumers.
The Singpost acquisition is strategic, with the possibility of applying this business model outside of Australia and extending into Southeast Asia.It also expands Singpost’s footprint in the Australian market.
According to an SGX filing, if a predetermined set of performance benchmarks is attained, SingPost will pay an additional A$1 million ($772,285) to Hubbed. A failure to reach those benchmarks will result in SingPost gaining an additional five per cent stake in Hubbed.
This comes amidst a series of deals by Singpost, most of them vertical acquisitions or the formation of joint ventures, as it seeks to consolidate its position as a super-regional logistics player with linkages across the Asia Pacific (APAC) region, which is seeing intense and sustained economic growth.
Vertical acquisition are typically done between buyers and sellers within the same industry, representing a combination of firms that operate at different stages of the same industry. This particular investment has additional elements of a horizontal and complimentary acquisition as well.
SingPost already provides ecommerce, postal and logistics solutions in the APAC region, and its recent activity resembles the super-regional strategy employed by financial institutions seeking to expand and reflects predicted M&A activity in the Australian financial sector by Japanese investors.