Logistics boom prompts private equity firms to make offer for Singapore's CWT

A general view of PSA International’s Tanjong Pagar container terminal in Singapore July 7, 2015. CWT has expanded over the past decade by growing its logistics business globally and snapping up a metals trading unit in 2011. — Reuters pic
A general view of PSA International’s Tanjong Pagar container terminal in Singapore July 7, 2015. CWT has expanded over the past decade by growing its logistics business globally and snapping up a metals trading unit in 2011. — Reuters pic

SINGAPORE, Aug 5 — Private equity firms KKR, Blackstone and Bain Capital have made informal approaches for buying CWT Ltd, people familiar with the matter said, in a deal estimated to value Singapore’s largest logistics company at up to S$1.6 billion (RM4.49 billion).

The talk of private equity’s interest comes as CWT’s controlling shareholder flagged a potential sale of the business. Shareholders of C&P Holdings Pte, which has a 32 per cent stake in CWT, were considering a strategic review of C&P’s business and assets, CWT said on Monday.

CWT has expanded over the past decade by growing its logistics business globally and snapping up a metals trading unit set up by Glencore’s founder Marc Rich in 2011.

“The logistics business has decent growth rates and that works nicely for sponsors,” said one person familiar with the matter. “The logistics play is very active lately,” he said.

In February, Japan Post Holdings agreed to buy Australia’s No. 1 freight and logistics firm Toll Holdings for A$6.5 billion (RM18.5 billion). In the same month, freight carrier Kintetsu World Express agreed to buy Singapore’s APL Logistics for US$1.2 billion (RM4.65 billion). Valuations for both deals were higher than market expectations.

CWT could fetch S$1.4 to S$1.6 billion, Maybank Kim Eng Research said in a report. The company currently has a market value of S$1.26 billion.

The sources, who declined to be identified due to the sensitivity of the situation, said private equity firms had sounded out CWT’s shareholders but there had been no formal approach yet.

They said companies including Japan Post and Nippon Express could emerge as other suitors for CWT, which employs around 6,000 people and reported record revenue and operating profit last year.

Japan Post, Nippon Express, KKR, Blackstone, Bain Capital and CWT declined to comment.

C&P, in which CWT chairman Loi Kai Meng has a significant holding, acquired shareholding control of the logistics firm in 2004. CWT insiders, including the chairman and his family, own nearly 65 per cent of the company, Thomson Reuters data shows.

In its statement this week, CWT said there was no assurance of any transaction. Credit Suisse and DBS are assisting C&P’s shareholders with the review.

Under Singapore rules, any bid for a 30 per cent or more stake in a company triggers a mandatory general offer for the entire firm.

“The assets are strategic and there is a lot of interest in the sale,” said another person. C&P is expected to reach out to prospective bidders later this year, the person said. — Reuters

Related Articles