SINGAPORE: A funeral parlour 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, lost as much as S$6.2 billion (RM15.87 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 sterilised 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 centres.
"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.
Singapore Exchange Ltd (SGX) 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.
The metamorphosis of a handful of small Singapore companies, mostly penny stocks, has made them among the most actively traded on the SGX, which is home to blue chips such as Singapore Airlines Ltd and DBS Group Holdings Ltd.
As of last week, many of the top 10 performers this year, with gains of 200-900 per cent, had started new businesses or said they were exploring such forays.
As part of one reverse takeover, Asia Pacific Strategic Investments Ltd, a funeral services provider in Malaysia, is transforming into a mining company with assets in Armenia. A new investor is buying a 30 per cent stake in the restructured firm for S$200 million, implying a total value of S$667 million.
"We have been making losses for the last three to four years. We have been looking for a new business or new life," said chief financial officer Lee Keng Mun. "We believe this gold mine is a profitable business project." Reuters