According to industry players, what is just for some people is not to others; investors must have to accept such a market reality.
According to Independent Financial Advisers (IFAs) and bankers, while the present takeover and privatisation deals appear unpleasant, the claims that they are promoting such deals, which are considered unjust to minority investors, are off the mark.
The IFAs also contest the suggestions that they need to consider the minority shareholder’s interests. They too claim that obtaining from all shareholders a consensus on an offer price is particularly complex.
Recently, the Singapore Exchange (SGX) reiterated to the companies about the exit offers, which are believed to be acceptable to every shareholders. Likewise, the SGX told IFAs to keep away from qualifying their views under various investment perspectives.
Based on the regulator, “opinions qualified by diverse investment horizons do not meet the requirements of the rules.” IFAs cannot have varying calls for investors with a short-term horizon and those with a long-term view.
Given that the assessment of the borderline deals is already a tough endeavour, industry players disapprove of the removal of the qualifiers. Ding Hock Chai, Kim Eng Capital’s corporate finance co-head, said, “If SGX disallows this, IFAs will have to take greater risks and put their neck out with their calls.”
Some of the current deals which have been approved by the IFAs as they are believed to be reasonable and fair include those at Man Wah Holdings, CK Tang and the recent Chartered Semiconductor Manufacturing.
The suggestion of the SGX that deals must be reasonable to every shareholder has agitated the IFAs. The IFAs have noted that to achieve the consensus is difficult as various investors had plonked money into the stocks at varying prices and at varying times.
One IFA who refused to be identified said, “You will never get to a conclusion if you say the deal has to be reasonable to every shareholder. If someone had gotten the shares at $2 but for the last five years, the share price traded at around 30 cents, does that mean I need to offer $2 to be able to satisfy the shareholder who came in at that level? No, the offer has to be fair or reasonable given the current circumstances.”
“Minority shareholders are beginning to see IFAs as instruments for increasing value for them, which is not correct. That should be the role of the financial advisers, whose job is to negotiate a better deal for the company,” added the IFA who declined to be named.