1983 Shin Corporation founded
2006 Temasek-led consortium took over
2011 Temasek started divesting
2015 Name change to Intouch Pcl
The Event of The Century must surely be the 2006 Temasek purchase of Shin Corp. It was audacious in its size. It caused the downfall of a prime minister. It brought great consternation to the whole foreign-owned business community in Thailand.
To look at this, assume Temasek was the beneficial owner of the full 96%.
The full cost of the acquisition in 2006 was 3,076,762,064 shares @ Thb49.25 = Thb151.5B (@ 24.67 = S$6.142B)
The SET reguires a free float of 15% to be maintained on pain of a fine of Thb1M per year. Temasek had planned on early divestment of some holdings but this was put on the back burners in view of the investigation of nominees, the coups, the premiership of Thaksin Shinawatra's sister, and the global financial crisis. Finally in 2011/2012 Temasek sold about 14% of the shares to increase liquidity in the counter. These were sold at a hefty discount of about 10% to market prices.
The Annual Reports of Intouch showed that Cedar and Aspen had zero holdings by 27 Aug 2013 28 Aug 2019 respectively.
The S$-Thb exchange rate moved within a narrow band during the relevant years so it's not a significant factor. The cost of divestment and carrying cost is more or less cancelled out by the good dividend returns of Shin Corp. So it is reasonable to focus on the price alone.
Unfortunately, information is not fully available to determine the final losses or gains of the investment. In the table above, the 3 lines of 'unreported' were shares disposed in the estimated timeframe but there is no media report nor any filing available.
The historical price chart below shows that any divestment pre-2012 Q1 would have meant heavy realised losses. Sales after this date would have been very profitable.
It is a fair assessment that there were no billion $ losses, In fact, it is possible Temasek actually made a net gain of at least S$1B by riding out the rough patch between 2006 to 2012.
Did Temasek use nominees to circumvent the foreign ownership laws?
The charge of use of nominees created great apprehension throughout the whole foreign business community in Thailand. Nominees for foreigners are illegal, but it has always been an inconvenient way of business as usual that no one interfered. Now the government may be forced to act, with repercussions on the whole economy.
Beyond the dollars and sense of investment, Temasek's buyout of Shin Corp was a display of unethical investment by a state sector player.
It is an abhorrent idea that a government agency can execute a business plan in illegal ways that put investment money at great risk, jeopardise diplomatic relations, and interfere with the local politics of the investee country. The smoking gun is the Shinawatra+ divestment took place 3 days after the legislative amendment to increase foreign ownership from 25% to 49%. It placed Temasek directly in cahoots with the Shinawatra admin and explains the high premium paid for the acquisition of Shin Corp shares.
One wonders whether the Singapore government viewed the investment as a disaster at the time, considering that it helped to depose the prime minister of a friendly neighboring country. The maturity of Thai politics is to be applauded that the diplomatic fallout was restricted to the burning of Singapore flags. On the other hand, Singapore parliament saw no need for a debate, and the owners of Temasek never did haul up its management for an explanation nor were any wings clipped. Questions of ethics are indeed challenging, when the husband of the CEO of the sovereign wealth fund happens to be the prime minister of the land.
The Event of The Century must surely be the 2006 Temasek purchase of Shin Corp. It was audacious in its size. It caused the downfall of a prime minister. It brought great consternation to the whole foreign-owned business community in Thailand.
Thai law forbids government officials to own business that involves official licencing. Shin Corp was a conglomerate in the telecommunication sector with licences for cellular, satellite and airline operations. On becoming PM, Shinawatra transferred his holdings to his children and other family members of his wife. Shinawatra+ together owned 1,487,740,120 or 49.595% of the ordinary shares. On 23 Jan 2006 Shinawatra+ sold their holdings to Temasek-led consortium @ Thb49,25 making a total consideration of Thb74.4B. (ex rate of 24.67 = S$2.969B).
The purchase was made by Temasek 3 days after the passing of legislation that increased foreign holdings in telecommunication assets from 25% to 49%. There was anger that the easing of cap on foreign ownership was passed to favour the PM and Temasek. Public anger was further fueled by the fact that PM paid no capital gains tax on both the transfer of shares to his family members and the sale to Temasek. There was also accusation that the other members of the consortium were actually nominees for Temasek. Siam Commercial Bank said it was purely an investment decision for them. However, SCB played the lucrative financial advisory role in the buyout and could have been a nominee in order to book some good fee revenue. This was a serious accusation as the Foreign Business Act is very clear that nominees are illegal. If guilty, Shin Corp was at risk of having its licences withdrawn, and Temasek at risk of having its investment down the drain. Nominees at risk of facing criminal charges.
Stock Exchange of Thailand (SET) ruling required Temasek to make a general offer for the remaining shares it did not already own, plus 200M warrants outstanding. Whereas an investment by Temasek should have been positive for Shin Corp, the market sentiment was by then very negative due to political and civic unrest in Bangkok. Its share price had dropped more than 5% below the offer price. That assured a resounding acceptance for a general offer. Temasek had to cough out much more cash than it originally planned. 
The general offer resulted in the Temasek consortium owing almost 96% of Shin Corp. Through 100% owned Aspen Holdings, Temasek owned 41.68% of Shin Corp. It maintained it was in compliance of the 49% foreign-ownership cap.
Back home in Singapore the investment caused much public consternation. The offered price of Thb49.25 per share seemed way too high against the 10 year monthly market average. The price ought to be depressed given that Shinawatra+ was cashing out amidst his weakening political clout. The years immediately following the acquisition saw Shin Corp share price took some beating due to (a) lack of liquidity as the free float was less than 4%, (b) uncertainties as to how the Thai government will react to the issue of nominees and tax avoidance, (c) fear of lost of licences and tax grab by the government, (d) the global financial crisis in 2007/2008. There was public disquiet of S$ billion losses by Temasek as folks mistook valuation losses for realised losses.
Did Temasek actually made disastrous losses as some said?
To look at this, assume Temasek was the beneficial owner of the full 96%.
The full cost of the acquisition in 2006 was 3,076,762,064 shares @ Thb49.25 = Thb151.5B (@ 24.67 = S$6.142B)
The SET reguires a free float of 15% to be maintained on pain of a fine of Thb1M per year. Temasek had planned on early divestment of some holdings but this was put on the back burners in view of the investigation of nominees, the coups, the premiership of Thaksin Shinawatra's sister, and the global financial crisis. Finally in 2011/2012 Temasek sold about 14% of the shares to increase liquidity in the counter. These were sold at a hefty discount of about 10% to market prices.
The Annual Reports of Intouch showed that Cedar and Aspen had zero holdings by 27 Aug 2013 28 Aug 2019 respectively.
The S$-Thb exchange rate moved within a narrow band during the relevant years so it's not a significant factor. The cost of divestment and carrying cost is more or less cancelled out by the good dividend returns of Shin Corp. So it is reasonable to focus on the price alone.
Unfortunately, information is not fully available to determine the final losses or gains of the investment. In the table above, the 3 lines of 'unreported' were shares disposed in the estimated timeframe but there is no media report nor any filing available.
The historical price chart below shows that any divestment pre-2012 Q1 would have meant heavy realised losses. Sales after this date would have been very profitable.
It is a fair assessment that there were no billion $ losses, In fact, it is possible Temasek actually made a net gain of at least S$1B by riding out the rough patch between 2006 to 2012.
Did Temasek use nominees to circumvent the foreign ownership laws?
The charge of use of nominees created great apprehension throughout the whole foreign business community in Thailand. Nominees for foreigners are illegal, but it has always been an inconvenient way of business as usual that no one interfered. Now the government may be forced to act, with repercussions on the whole economy.
Note that charges are against persons who allow themselves to be used as 'nominees' and not against those that used them. There were no charges against Temasek.
Commercial Dept and Thai Police investigations concluded that Sarasin and Poonpipat were indeed nominees for Temasek as their capital came from Siam Commercial Bank loans guaranteed by Cypress Holdings. In an interview, Jimmy Poon, a Temasek managing director of investment, acknowledged that Cypress provided the guarantee to facilitate the deal, but that he had no personal involvement nor knowledge when that was done. This 'monkey no see' response when things go wrong is atypical of Singapore Inc. .
Surin Upatkoon was very low profile in Thailand. He is a Thai Chinese with substantial interest in Malaysia where he is known as Dato Lau Kim Koon. One of the richest man in Malaysia, Dato Lau had interest in listed companies Multi-Purpose Holdings, WME, and Magnum. He rightly claimed he is a person of substantial standing, capable of raising his own capital, and has no need to be anyone's nominee. But he needs to explain why his capital for Kalurb Kaew came from his Virgin Island company Fairmont Investment Group. The money trail went cold, for obvious reasons. Upatkoon was charged in 2007 for acting illegally as nominee for a foreigner in the buyout of Shin Corp. He said he will fight it in court but never turned up. In 2015 there was an indictment against him but there has been no further news on the affair.
The Thai authority's accusation is supported in 3 ways -- Temasek owns 49% of the shares in Cedar Holdings which carried 90% voting rights, the money trail of Kularb Kaew's capital injection, and the manner of Temasek's eventual divestment via Thai NVDR.
Thai NVDR Co Ltd:
Thai NVDR Co Ltd:
This is a securities holding company owned by the SET. It was set up as a mechanism to solve the foreign ownership cap. Foreigners use Thai NVDR to purchase the public equities and in turn will acquire a depository receipt from Thai NVDR. (NVDR = non-voting depository receipts). This mechanism effectively curtails foreigners' voting rights, making them only passive investors in the relevant public company.
Thai NVDR picked up big chunks of Shin Corp divested by Temasek. As at 25 Nov 2010 before Temasek started disposing Shin Corp shares, Thai NVDR holdings of the counter was only 0.27%. By 26 Aug 2013 its holdings shot up to 22.93%. It has since dropped to 16.6% as at 27 Aug 2019.
Not only were the shares acquired through Thai NVDR, those purchases were registered in the names of several Bank Nominee companies. It meant the accused nominees of Temasek have been effectively 'laundried' through Thai NVDR and nominee companies. They have simply vanished. It also means that the divestment by Temasek could have involved a high percentage of transfers from right hand to left hand, making it impossible for outsiders to gauge the gains or losses of Temasek. It is also impossible to tell whether Temasek still retains any shares in the company via Thai NVDR.
Temasek sells 21% of Intouch to Singtel :
Temasek sells 21% of Intouch to Singtel :
In rebalancing its portfolio, Temasek had plans to rationalise holdings in certain sectors in its operating subsidiaries with a view to building a global winner. At the time, Temasek had plans for the banking and telecommunication sectors, using DBS and Singtel as the respective mothership vehicles.
The jewel in the Shin Corp crown was its subsidiary Advanced Information Services in the cellular operation. AIS had 40% of the mobile market in Thailand. It was the cash cow of the group, responsible for 90% of revenue. Singtel was already a major shareholder of AIS with 23.3% held by its investment arm, Singtel International Ltd. Singtel is actively involved in the operation of AIS.
Back in 2014 Temasek had wanted to load Aspen Holdings' 41.62% stake in Shin corp onto Singtel. That would have a serious impact on Singtel either with share dilution and or massive debt. And it made no business sense to Singtel whose strategic interest was in AIS, of which it already was a major shareholder. It had no interest in a holding company which has no unfriendly major shareholder. Finally the sales had to be pared down to 21% and the narrative was a move to protect Singtel's interest in AIS.
The question of ethical investments:
Back in 2014 Temasek had wanted to load Aspen Holdings' 41.62% stake in Shin corp onto Singtel. That would have a serious impact on Singtel either with share dilution and or massive debt. And it made no business sense to Singtel whose strategic interest was in AIS, of which it already was a major shareholder. It had no interest in a holding company which has no unfriendly major shareholder. Finally the sales had to be pared down to 21% and the narrative was a move to protect Singtel's interest in AIS.
The question of ethical investments:
Beyond the dollars and sense of investment, Temasek's buyout of Shin Corp was a display of unethical investment by a state sector player.
It is an abhorrent idea that a government agency can execute a business plan in illegal ways that put investment money at great risk, jeopardise diplomatic relations, and interfere with the local politics of the investee country. The smoking gun is the Shinawatra+ divestment took place 3 days after the legislative amendment to increase foreign ownership from 25% to 49%. It placed Temasek directly in cahoots with the Shinawatra admin and explains the high premium paid for the acquisition of Shin Corp shares.
One wonders whether the Singapore government viewed the investment as a disaster at the time, considering that it helped to depose the prime minister of a friendly neighboring country. The maturity of Thai politics is to be applauded that the diplomatic fallout was restricted to the burning of Singapore flags. On the other hand, Singapore parliament saw no need for a debate, and the owners of Temasek never did haul up its management for an explanation nor were any wings clipped. Questions of ethics are indeed challenging, when the husband of the CEO of the sovereign wealth fund happens to be the prime minister of the land.
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