StanChart’s loss-making PE unit said to plan stake in Singapore crane firm

Photo: Reuters

Standard Chartered Plc’s loss-making private equity unit is planning an investment in a Singaporean crane firm, people familiar with the discussions said, signaling it’s still open to deals even as the business shrinks.

Standard Chartered Private Equity, or SCPE, may spend S$105 million ($77 million) on a 29 percent stake in publicly-listed Tat Hong Holdings Ltd., said the people, who requested anonymity as the talks are private. Executives are considering paying up to 55 Singapore cents per share, more than 40 percent above its average price this year, as part of a bid to take the crane company private titled ‘Project Titan,’ the people said.

The potential investment shows Standard Chartered is still trying to make money from the high-risk, high-return business of private equity, even after Chief Executive Officer Bill Winters moved to wind down the SCPE unit last year. The division has lost more than $1 billion since 2015 as deals went awry across emerging markets, hampering the CEO’s efforts to overhaul the bank.

Standard Chartered in London declined to comment and a spokeswoman for Tat Hong in Singapore didn’t respond to requests for comment.

Early Friday, Tat Hong requested a trading halt in its shares on the Singapore exchange, pending an announcement.

Executives at SCPE decided late last month to move ahead with Project Titan, the people said. Tat Hong’s current controlling shareholders, Chwee Cheng & Sons Pte and related parties, who own more than half of the company, would boost their stake to 71 percent, the people said.

Tat Hong has been approached by an unidentified party about a potential transaction, according to a Sept. 21 statement. Talks remain ongoing, the company said at that time.

The company, which began in Singapore in 1957 before expanding across Asia, has struggled with a decline in economic growth in China and a slump in commodity prices, reports show. Tat Hong’s revenue has tumbled and the company has posted S$77 million of combined losses for the past two financial years, according to the reports. Shares are down about 66 percent since 2013.

SCPE executives have had rough years of their own after spending billions of dollars of Standard Chartered funds on stakes in high-risk companies across the Middle East, Africa and Asia that then lost value. Winters ousted the head of the business, Joe Stevens, late last year and the bank announced that it would begin exiting its investments.

The Standard Chartered division that houses SCPE, known as Principal Finance, was largely responsible for a $68 million “restructuring” expense in the third quarter of 2017, bringing total costs from the division this year to about $147 million, statements from the London-based bank show. That adds to combined losses of $950 million for 2015 and 2016.

Standard Chartered stopped classifying Principal Finance as an ongoing business after Winters’ decision to pull back, reports show.

“We’re now going to be very careful about managing the exit process,” Finance Director Andy Halford told reporters Feb. 24. “We decided in the latter part of 2016 that this is probably not a business that’s for us.”

Private Equity International reported on Nov. 6 the bank retained Credit Suisse Group AG to advise on a spin out of the business.

Still, SCPE has continued to strike deals since Winters’ decision. The unit pushed ahead with plans to invest $100 million in a Vietnamese play-center operator and an Indian finance firm, Bloomberg reported last November. Months later, the unit headed a consortium that took a majority stake in Shanghai Siyanli, a Chinese beauty care company, according to a statement at the time. In March, SCPE’s real estate unit led a $44 million investment in a site in Seoul.

Also Read:

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Three senior exits in StanChart PE this year, China-based Wei Zhu latest to leave beleaguered firm

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.