The divestment generated A$781.5 million in gross proceeds and an estimated gain of S$289.5 million
[SINGAPORE] Singapore Post (SingPost) said on Thursday (Mar 27) that it has completed the divestment of its Australian logistics business, Freight Management Holdings (FMH), for A$1 billion (about S$845 million). The business was acquired by Australia-headquartered private equity investment firm Pacific Equity Partners.
The divestment generated gross proceeds of about A$781.5 million – a notch higher than the previously expected A$775.9 million – and an estimated gain of S$289.5 million. This reflects a levered return on equity of around four times SingPost’s A$93.6 million equity investment in FMH over the last four years, said the group in a bourse filing.
Sale proceeds will be used to reduce debt, including the repayment of a A$362.1 million debt. The loan was taken for the financing of FMH’s acquisition.
The board will also announce the amount to be given as a special dividend at a later date.
With the completion of the divestment, SingPost’s wholly owned subsidiary SingPost Australia Investments and all of its subsidiaries, including FMH, will cease to be part of the group.
In a press statement, SingPost said the sale necessitates a strategy reset for the group – earnings in the interim are now dependent on its postal and e-commerce logistics business in Singapore, its international e-commerce logistics business, and two major non-core assets that have been performing well.
“The successful divestment of the Australia business, along with potential future divestitures, will create a significant cash pool,” it added. “This will allow SingPost to reinvest in its future, reduce debt, or return proceeds to shareholders, with the board ensuring these options align with shareholder interests.”
Shares of SingPost closed 1.7 per cent or S$0.01 higher at S$0.585 on Thursday, before the news.
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