Fundraising

Temasek to buy out Singapore metro operator

The transaction, which values SMRT at $1.9bn, will see the listed company become a wholly owned subsidiary of the $180bn sovereign wealth fund.

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Temasek, the Singaporean sovereign wealth fund, has proposed to acquire all the issued ordinary shares it doesn't already own in SMRT Corporation, the country’s listed metro operator.

Belford, a wholly owned subsidiary of Temasek, will pay S$1.68 per share cash for the remaining 46 percent stake in the transport business. The offer represents a 10.8 percent premium to the company's 12-month volume-weighted average price, valuing SMRT at S$2.57 billion ($1.9 billion; €1.72 billion). 

SMRT is a multi-modal public transport operator in Singapore offering a suite of rail, bus and taxi services. “Privatisation will provide SMRT with greater flexibility to focus on its primary role of delivering safe and high quality rail service, without short-term pressures of being a listed company, in the midst of its transition to a new regulatory framework under the New Rail Financing Framework (NRFF),” Temasek said in a statement. 

The directors of SMRT have said they are supportive of the acquisition. 

As part of the regulatory transition, the Land Transport Authority of Singapore announced last week it will buy SMRT’s rail assets for S$991 million through the NRFF. 

“We welcome the transition to the NRFF, which is an improvement on the current framework. However, the company will continue to face significant risks,” said Koh Yong Guan, chairman of SMRT. 

“We do not have any control over fare increases and ridership growth – two key revenue drivers for SMRT trains. At the same time, SMRT will be faced with challenges in the regulatory environment with costs and uncertainties associated with an ageing and expanded network, and to deliver higher rail reliability and service.” 

Once the acquisition is complete, SMRT will become a wholly owned subsidiary of Temasek and will be delisted from the Singapore Exchange, the fund said.

“Today, we are proposing to move SMRT to private ownership so we can more closely collaborate with the Company on system level transformation, including its transition to the new regulatory environment without the distraction of being a listed company,” added Chia Song Hwee, president of Temasek International.