Temasek to reduce stake in Shin Corp

[inlinesix]

http://www.ft.com/cms/s/0/dcf9ab22-3c3b-11...?nclick_check=1

http://www.set.or.th/set/newsdetails.do?ty...e=en&country=US

[Apollo]

Risks rigorously assessed, and firm followed Thai laws, precedents Shin Corp deal 'was not reckless' Date: 15/11/2006

Source: Straits Times

Author: Erica Tay

 

THE Government said yesterday it was satisfied that Temasek Holdings had rigorously assessed the risks of investing in Thai conglomerate Shin Corp.

 

The Singapore investment company had also received the 'best advice possible' and went into the US$3.8 billion (S$5.9 billion) investment with strong Thai partners.

 

'It was not a reckless investment,' said second finance minister Tharman Shanmugaratnam in Parliament yesterday.

 

Mr Tharman was stating the Government's position on Temasek's controversial purchase of Shin Corp shares this year from family members of former Thai prime minister Thaksin Shinawatra, which resulted in a general takeover offer.

 

He fielded questions from five MPs, ranging from how the political risks of the deal were assessed, to whether Temasek had broken any Thai laws and would incur losses from the transaction.

 

In explaining how Temasek had approached the deal, Mr Tharman said it had been guided by the advice of Thai legal experts, as well as Thai and international investment advisers.

 

Temasek had also followed precedents set for foreign investments in Thailand and went in with reputable Thai co-investors, among them 'a leading bank with a strong reputation in Thailand'.

 

He also noted that Temasek had, to the best of its knowledge and abilities, acted in accordance with Thai laws.

 

'This is a clean transaction on the stock exchange of Thailand, paid for entirely in Thailand. Totally clean. No influence peddling,' he said.

 

'The Government played no part in Temasek's decision to invest in Shin Corp. Temasek made its own commercial decision.'

 

Asked by MPs about how Temasek assessed the political risk of investments abroad, Mr Tharman said the company had a 'comprehensive risk management framework' in place.

 

'The decision on an investment is only taken after clear-headed business analysis and a weighing of risk-reward trade-offs. Temasek applied this process to its investment in Shin,' he said.

 

When asked by Workers' Party chief Low Thia Khiang to elaborate on how Temasek assessed the specific risks surrounding the deal, Mr Tharman said he would not be drawn into a discussion on that.

 

'I am not very keen to provide my own analysis, or our own analysis, of what the political outlook for Thailand was at the point that Temasek made its investment,' he said.

'Suffice to say that Temasek did obtain the best advice possible at the time.'

 

Turning to potential losses from the deal, Mr Tharman cautioned Parliament against becoming too alarmed by media reports of large paper losses.

 

These are paper losses calculated based on the share price of Shin Corp today, not realised losses, he explained.

 

Shin shares last closed at 29.75 baht (S$1.27) per share, nearly 40 per cent lower than the 49.25 baht per share Temasek paid for a controlling stake earlier this year.

Given that the free float of Shin shares is about 4 per cent, the market price of the shares may not reflect the value of the underlying business within the Shin group, he added.

 

'Ultimately no investment is risk-free,' Mr Tharman concluded.

 

'What is critical is that the risk and returns are assessed thoroughly for each investment.

 

'Temasek went into Shin as a long-term investor, and time will tell how well this investment (performs).'

 

Outlining the Government's relationship with Temasek, Mr Tharman also said the Government could not assess the merits of every individual investment.

 

'If the Government starts intervening, influencing, or setting detailed guidelines, it will ultimately backfire... and it will backfire on Temasek as well,' he warned.

 

The Government should instead focus on ensuring that Temasek has a competent board of directors, and on replacing the board if it underperforms.

 

It should also hold Temasek accountable for 'good, long-term returns on its overall performance, not individual deals'.

 

Meanwhile, Temasek's chief executive, Ms Ho Ching, also found herself fielding questions about the Shin deal at the Morgan Stanley Asia Pacific Summit yesterday.

She was asked, after delivering a keynote address, how the Shin investment issue might be resolved.

 

'As at this moment, your guess is as good as mine,' she replied.

 

'We believe that this present government wants to bring Thailand back on a steady course of growth and development. At this point in time, I will say that we are cautiously optimistic.'

 

 

http://app.info.gov.sg/data/art_ShinCorpDe...ess_151106.html

 

less then 5 years is really very very long term investment indeed... neber knew making such big losses is called investment. cannot imagine the even bigger holes in rescuing banks.

[Kingcopa]

What is new

[Apollo]

mebbe ANNUITY will need to b increase to 110yrs.

[Celicar]

"best advice possible", "comprehensive risk management framework", Temasek acted according to Thai laws "to the best of its knowledge and abilities", all these phrases are speaking something without saying anything, with plenty of room to reverse and U-turn in future.

 

If you read the report, LTK didn't ask for the results of the Temasek's risk assessment, but HOW Temasek went about it. In answer Tharman said he is not keen to share his/"our" own analysis of what was the political outlook for Thailand at that relevant time, and quickly repeat that they got the "best advice possible". Another red herring and broken record answer. Yawn.

 

I also learn that paper loss is no cause for alarm as long as it is not realised, so long as you convince yourself you are a "long-term investor". Of course, it is anybody's guess what it means, my take is that the term will end only when they can say, through their own numbers play, that Shin Corp shares are no longer making a loss. If it means the day after Kingdom come, so be it. You want an admission of a mistake? Not in this lifetime.

[Sabian]

dun liddat lar...

banks got margin account customers also becum long term holders.

[Ah_tee]

'The Government played no part in Temasek's decision to invest in Shin Corp. Temasek made its own commercial decision.'

 

 

so temasek is now not a GIC ? its functioning as a individual entity with a different FAMILEE ?

 

and the funding DOES NOT come from inland revenue?

[Kingcopa]

There go our chance to see our $$$ inside our CPF. We slog all our life for this day (take our CPF) and all it take is a few sentence, we can see but cannot touch.

 

We lost our basic right to manage our own $$$. Duno gahment will plan for our furneral or not.

Edited June 18, 2008 by Kingcopa

[Mzrmazda3]