THIS KIND OF ARTICLE CAN ONLY FOOL THE 66.6%....
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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD class=wintiny noWrap align=right>18780.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD>Temasek investment in cash calls pays off
</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD>Some of money pumped into rights issues may have come from sale of stakes in BoA, Barclays </TD></TR><TR><TD><!-- Author --></TD></TR><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Gabriel Chen
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE investments Temasek Holdings has made in rights issues over the past eight months have surged by around 184 per cent on the back of rocketing global equity markets.
Data compiled by The Straits Times from public information shows that Temasek has spent about US$2.9 billion (S$4.2 billion) subscribing to new shares of companies in which it already holds stakes.
It began its round of investments by taking up new shares in Standard Chartered Bank (Stanchart) in November.
It has also joined cash calls made by DBS Group Holdings, Indonesia's Bank Danamon, CapitaLand, Chartered Semiconductor Manufacturing and Neptune Orient Lines.
In a rights issue, a company sells new shares to raise capital. Shares are offered - usually at a discount to the current price - to existing investors in proportion to their holding.
Temasek's decision to take part in these issues looks like a home-run given the surge in prices.
Take Stanchart. It offered existing shareholders 30 new shares for 91 already held at 390 pence each in November, a 48.7 per cent discount to its last traded price.
Temasek invested more than US$500 million in the rights issues and has seen the shares rise by around 293 per cent during an eight-month period.
The DBS rights issue in December priced the new shares at $5.42 apiece, a 45 per cent discount to the bank's last traded share price at that time of $9.85.
DBS shares have since surged by more than 140 per cent from its rights offer price.
Analysts are not surprised by the performance of the rights shares. Many of the companies announced capital raising exercises during the first quarter - at a time when stock prices were already very low.
Many of the rights also came with huge discounts - Chartered Semiconductor's was at a 65.9 per cent discount to its last traded price - so when markets rallied from their lows in March, the shares followed suit.
But analysts caution that to really see whether Temasek made money after the rights offering, its existing holdings in those seven firms must also be taken into consideration.
Mr Hugh Young, chief executive of the Asia-Pacific arm of Aberdeen Asset Management, said that a better way to look at Temasek's performance would be also to factor in the 'old shares' it held and rate the performance of both tranches as a whole.
Another analyst argued such a study must also take into account the dilutive effects a rights issue has on a firm's earnings per share (EPS) or return on equity (ROE), for instance.
It is likely that Temasek subscribed to the rights not only for the chance to profit on the upside, but also to shore up confidence in what it viewed as 'important and strategic investments', according to an industry source.
He said: 'Temasek needs to prepare itself to first and foremost, assist its key companies in which it has controlling or majority or significant stakes via capital injection.
'Singapore Temasek-linked companies provide growth and employment to Singaporeans, directly or indirectly.'
Some analysts believe that Temasek used most if not all of the cash from the sale of its stakes in Bank of America (BoA) and Barclays to subscribe to the rights.
Temasek could also have used some of that cash for investments in Olam International and China Construction Bank earlier this year, they say.
Temasek is said to have sold its stake in Barclays in December and January at an estimated loss of between £500 million ($1.2 billion) and £600 million. It paid £975 million to buy the shares at 720 pence apiece in July 2007.
Temasek also took a hit of between US$2.3 billion and US$4.6 billion from its BoA divestment, which was done in several tranches in the first quarter of this year when BoA shares ranged between US$2.53 and US$14.81.
A fund manager said there is 'no way to know for sure' how much better off Temasek would be now if it had not sold its stakes in BoA and Barclays, as the selling price has not been disclosed publicly.
Still, he reckoned that Temasek would have pared some of those losses if it had waited. BoA shares closed at US$14.79 as at July 31.
[email protected]
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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD class=wintiny noWrap align=right>18780.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD>Temasek investment in cash calls pays off
</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD>Some of money pumped into rights issues may have come from sale of stakes in BoA, Barclays </TD></TR><TR><TD><!-- Author --></TD></TR><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Gabriel Chen
</TD></TR><TR><TD><!-- show image if available --></TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE investments Temasek Holdings has made in rights issues over the past eight months have surged by around 184 per cent on the back of rocketing global equity markets.
Data compiled by The Straits Times from public information shows that Temasek has spent about US$2.9 billion (S$4.2 billion) subscribing to new shares of companies in which it already holds stakes.
It began its round of investments by taking up new shares in Standard Chartered Bank (Stanchart) in November.
It has also joined cash calls made by DBS Group Holdings, Indonesia's Bank Danamon, CapitaLand, Chartered Semiconductor Manufacturing and Neptune Orient Lines.
In a rights issue, a company sells new shares to raise capital. Shares are offered - usually at a discount to the current price - to existing investors in proportion to their holding.
Temasek's decision to take part in these issues looks like a home-run given the surge in prices.
Take Stanchart. It offered existing shareholders 30 new shares for 91 already held at 390 pence each in November, a 48.7 per cent discount to its last traded price.
Temasek invested more than US$500 million in the rights issues and has seen the shares rise by around 293 per cent during an eight-month period.
The DBS rights issue in December priced the new shares at $5.42 apiece, a 45 per cent discount to the bank's last traded share price at that time of $9.85.
DBS shares have since surged by more than 140 per cent from its rights offer price.
Analysts are not surprised by the performance of the rights shares. Many of the companies announced capital raising exercises during the first quarter - at a time when stock prices were already very low.
Many of the rights also came with huge discounts - Chartered Semiconductor's was at a 65.9 per cent discount to its last traded price - so when markets rallied from their lows in March, the shares followed suit.
But analysts caution that to really see whether Temasek made money after the rights offering, its existing holdings in those seven firms must also be taken into consideration.
Mr Hugh Young, chief executive of the Asia-Pacific arm of Aberdeen Asset Management, said that a better way to look at Temasek's performance would be also to factor in the 'old shares' it held and rate the performance of both tranches as a whole.
Another analyst argued such a study must also take into account the dilutive effects a rights issue has on a firm's earnings per share (EPS) or return on equity (ROE), for instance.
It is likely that Temasek subscribed to the rights not only for the chance to profit on the upside, but also to shore up confidence in what it viewed as 'important and strategic investments', according to an industry source.
He said: 'Temasek needs to prepare itself to first and foremost, assist its key companies in which it has controlling or majority or significant stakes via capital injection.
'Singapore Temasek-linked companies provide growth and employment to Singaporeans, directly or indirectly.'
Some analysts believe that Temasek used most if not all of the cash from the sale of its stakes in Bank of America (BoA) and Barclays to subscribe to the rights.
Temasek could also have used some of that cash for investments in Olam International and China Construction Bank earlier this year, they say.
Temasek is said to have sold its stake in Barclays in December and January at an estimated loss of between £500 million ($1.2 billion) and £600 million. It paid £975 million to buy the shares at 720 pence apiece in July 2007.
Temasek also took a hit of between US$2.3 billion and US$4.6 billion from its BoA divestment, which was done in several tranches in the first quarter of this year when BoA shares ranged between US$2.53 and US$14.81.
A fund manager said there is 'no way to know for sure' how much better off Temasek would be now if it had not sold its stakes in BoA and Barclays, as the selling price has not been disclosed publicly.
Still, he reckoned that Temasek would have pared some of those losses if it had waited. BoA shares closed at US$14.79 as at July 31.
[email protected]
</TD></TR></TBODY></TABLE>
