Grave digger to gold digger: Singapore business shifts feed governance worries

Reuters ^ | 10/10/2013 | Ansuman Daga

[TexGrill]

(Reuters) - A funeral parlor switches into gold mining; a steel trader turns into a property developer; and a food packaging firm ventures into resources.

Reverse takeovers and shifting corporate business strategies on Singapore's stock market have come under the spotlight in the wake of a recent collapse in the share prices of three companies listed on Southeast Asia's biggest bourse.

One of the companies, Blumont Group Ltd (BLUM.SI), lost as much as S$6.2 billion ($4.96 billion) in market value in the past week. Prior to that, Blumont had surged as much as 12-fold this year, making it Singapore's top performer. The company, which listed in mid-2000, has shifted its focus between investment - most recently in mining companies - property development and sterilized food and medicine packaging.

The changes in business operations and the use of reverse takeovers - where a private firm buys a public company usually to bypass an often lengthy listing process - and its impact on the broader market risk undermining the credibility of one of Asia's biggest financial and regulation centers.

"It's one thing to change businesses like that if you're a closed-end investment fund, but if it's a listed company and it keeps chopping and changing then that raises all sorts of governance concerns because as a minority shareholder you don't then know what you're a shareholder of," said Jamie Allen, secretary general of the Asian Corporate Governance Association.

The market operator, Singapore Exchange Ltd (SGX) (SGXL.SI), had already toughened its listing rules after a string of blow-ups at locally-listed Chinese stocks, known as S-chips, in 2008 and 2011. At the same time, it has seen few big-ticket listings.

[TexGrill]

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