Posts Tagged ‘Valuations’

M&A valuations are worthless?

In Humour on 26/07/2012 at 10:03 am

No it’s an art form! Like Ravi’s performance at Hong Leong Green last Sunday. Err I think. I’d better explain.

Reuters, citing unidentified people with knowledge of the matter, reports: “Japan’s Kirin Holdings Ltd has hired Deutsche Bank to examine all options as it prepares to defend its interest in Singapore conglomerate Fraser and Neave.” Kirin has 15% of F&N, the second largest shareholder. (The largest shareholder was OCBC Bank who agreed to sell to cos connected to ThaiBev.)

And with Goldman Sachs being appointed to advise F&N, it’s feeding time for investment banks.

One of the skills they are supposed to bring to the table is how to value a deal. So this is funny: Citi and Morgan Stanley are in negotiations for Morgan Stanley to boost its controlling stake in their wealth management joint venture by 14% to 65%. But their valuations for the business are US$13.5 billion apart.

Sounds irrational, but there are gd sound technical reasons. I kid you not.


Three risks

In Investments on 02/02/2010 at 10:36 am

These three risks apply here too especially the earnings and valuation risks. Note  that they are not the same.

As to political risk, the risk here is not in Singapore but in Malaysia and Indonesia.

If religious tensions escalate; or the Malaysian government cracks down on dissidents or is seen as weak, then foreigners will sell their Malaysian shares, and S’pore will be caught in the backwash.

In Indonesia the issues are the corruption and the unhappiness about it. Thousands of demonstrators have taken part in anti-government protests. Protesters say President Susilo Bambang Yudhoyono has not delivered on his promise to eradicate corruption during the first 100 days of his second term.

These issues could affect the perception of investors about Indonesia (a darling of emerging market investors), again causing spillover effects here.