StanChart Unit Offers to Buy Stake in Singapore Crane Firm

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

Standard Chartered Private Equity, or SCPE, has proposed to buy shares of publicly listed Tat Hong Holdings Ltd., the Singapore-based company said Friday in a filing to the local stock exchange. The London-based bank’s buyout unit has offered to pay 50 Singapore cents ($0.37) a share, subject to conditions, Tat Hong said in the statement, without specifying the number of shares involved. That’s 28 percent higher than the year-to-date average price of the firm, which has a market value of S$347 million.

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. Early Friday, Tat Hong requested a trading halt in its shares on the Singapore exchange. SCPE’s proposal is subject to conditions including an agreement of terms on a definitive partnership and binding debt financing, and final approval by its investment committee, Tat Hong said in a statement.

Tat Hong isn’t involved in the discussions relating to the definitive partnership terms, it said Friday.

Project Titan

Executives at SCPE decided late last month to move ahead with the proposal known as Project Titan, people familiar with the discussions 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 while Standard Chartered Private Equity would get a 29 percent, the people said, declining to be identified as the talks are private.

Tat Hong, 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. The company’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. The 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.

Mounting Costs

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.

To contact the reporters on this story: Donal Griffin in London at dgriffin10@bloomberg.net, Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net.

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Jon Menon

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