Will the Singapore stock market continue to shrink?

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SINGAPORE (May 5): Large corporations, private-equity players and even controlling shareholders are snapping up locally-listed companies.

Last year, the Singapore Exchange (SGX) saw 27 privatisations excluding that of REIT manager ARA Asset Management, as well as an offer from Dutch beverage giant Jacobs Douwe Egberts (JDE) for instant coffee producer Super Group.  

(See also: Confirmed: John Lim-led consortium to buy out ARA Asset Management in S$1.8 bil deal)

(See also: Super Group now 78.29% owned by Jacobs Douwe Egberts)

While much of the spotlight has been on the collective S$13.2 billion in market capitalisation that was wiped off SGX, investors should not forget that those offers also put plenty of cash into the hands of shareholders.

The average price premium associated with the general offers was 30%, according to a SGX spokesperson.

As bargain-hunters have been actively scouring the market in search of companies to buy on the cheap, majority shareholders and founding families are also increasingly buying out minority shareholders and taking their companies private, which some observers think boil down to the issue of succession planning.

Companies are also scaling up to gain a competitive edge over their rivals, and many companies are turning to inorganic growth as the preferred method of expansion.

And while some might bemoan the shrinking pool of companies in Singapore, those funds are likely to be reinvested.

Where could the money turn up?

This week, analysts and industry observers tell The Edge Singapore why they think more of such deals are likely to take place this year as they see drivers of deals, other than stock valuations, in the coming months for the region to maintain a sustained level of merger-and-acquisition activity.

Find out more by picking up the latest copy of The Edge Singapore, (Issue 779, week of May 8), available at newsstands today.