Is Asian M&A going retro? First we had JP Morgan advising on both sides of a transaction in Taiwan, and late on Friday, ING Barings announced it was doing the same in Singapore.
M&A professionals must be wondering what has happened to the concept of two advisers? In the heyday of Asian M&A last year, PCCW and related parties had almost 10 advisers, but in recent deals the old Asian practice of a single adviser has resurfaced.
ING Barings latest coup is for two of Singapore tycoons, Kwek Leng Beng companies, Hong Leong Finance and Singapore Finance Ltd. ING Barings has advised both listed companies on an asset swap that sees both companies refocusing their businesses.
Hong Leong Finance will get the real estate assets of Singapore Finance and will in turn give Singapore Finance its various finance companies.
Both companies will remain listed, meaning Singapore investors will be able to choose between a dedicated property company (the to-be-renamed Hong Leong Finance) and what will be Singapores biggest finance company, Singapore Finance.
The deal comes in the wake of new Monetary Authority of Singapore guidelines on finance companies. It wants to untangle their somewhat messy structures and make them strong standalone vehicles.
And that means getting out of property investments, for example.
This is the logic behind the latest deal, which is a cash and stock transaction.
The net asset value of Hong Leongs finance companies are S$528 million ($295.88 million) and these will be added to Singapore Finances, which have an NAV of S$454.4 million. Meanwhile, Singapore Finances property assets, which have an NAV of S$39.55 million, will be transferred to Hong Leong Finance.
In terms of the exchange ratio, 1000 shares of Hong Leong Finance will be exchanged for 1530 shares in Singapore Finance, plus cash of S$523 will be paid back to investors as a special dividend.
The most positive aspect of the deal is the creation of two focused, listed companies. Given the push by the investment analyst community for focus, this ought to lead to both companies being re-rated and unlocking value for shareholders.
The deal is still subject to shareholder approval. An independent financial adviser (as yet unannounced) will be hired to give a fairness opinion.