The Straits Times / The Business Times News on Hyflux

Olivia Lum, 2G Capital reduce stakes in Hyflux

INVESTMENT firm 2G Capital and Hyflux chief executive (CEO) Olivia Lum sold a total of 27 million shares in the water-treatment firm at $3.45 apiece on Tuesday.

Ms Lum reaped $41.4 million from the sale of 12 million shares, paring her holding from 36.9 per cent to 34.51 per cent.

2G Capital's disposal of 15 million shares for $51.8 million reduced its stake to below the substantial shareholding level of 5 per cent. The shares were sold via placement in a deal handled by JP Morgan.

Sources familiar with the transaction said the buyers were mainly Asian and European funds. Institutional investors have been keen to invest in Hyflux but there have been insufficiently large blocks on the market.

The price was not disclosed in announcements from 2G Capital and Ms Lum yesterday, but sources close to the deal said that the price was $3.45, a slight discount to Tuesday's close of $3.62.

While the sale may boost the liquidity of Hyflux shares and improve the quality of its investor base, the placement depressed the counter, which fell 16 cents to $3.46 yesterday - the lowest level in two weeks. About 3.76 million shares changed hands.

Ms Lum has disposed of Hyflux shares before. Over a three-month period last year, she sold about four million shares at much lower prices of $1.49 and $1.44 each.

With her latest sale of 12 million shares, she is left with 176.4 million shares.

But 2G Capital's move has raised some questions about whether it could be winding down the pace of its investments.

The firm, which was founded by former JIT head Tommie Goh and Mr Gay Chee Cheong, sold even more shares than Ms Lum, yet Hyflux is most likely the top performer in its portfolio.

It sold 15 million shares, reducing its stake from 5.34 per cent to 2.4 per cent.

The company is likely to have chalked up a hefty profit, given previous reports of earlier purchases of shares at 55 cents and 91.2 cents. These unit costs work out to even less, once bonus issues are factored in.

2G Capital already has stakes in Accord Customer Care Solutions (ACCS), Raffles Education, Midas Holdings, Junma Tyre Cord and Asia Environment.

And these tend to be significant holdings of around 5 per cent.

Based on the latest annual reports, 2G Capital owns nearly 5 per cent of ACCS, more than 9 per cent of Raffles Education and about 6 per cent of Midas.

The investment company has been feted for its top picks, which had performed as soon as it invested in them.

2G Capital has also shared the limelight with the high-profile chiefs of the companies, including Mr Victor Tan, founder of the beleaguered ACCS.

For example, Mr Gay, representing 2G Capital, would attend many of Hyflux's press conferences. He also sits on the boards of Hyflux, Midas, Raffles Education and, until recently, ACCS.

The value that 2G Capital brings to companies is to assist them with their growth strategies and even help in negotiations with potential investors.

On an informal basis, 2G Capital meets the companies on a regular basis.

Last year, it started a more formal networking session, called the 2Gplus network. There was even a session held in Shanghai, which CEOs such as Ms Lum, Mr Patrick Chew of Midas and Raffles Education's Mr Chew Hua Seng attended.

But 2G's investment star may have waned a bit this year, particularly with ACCS having turned in a $37 million loss for last year and having to deal with an ongoing Commercial Affairs Department investigation.

sushyan@sph.com.sg