DBS complied with rules as issue manager of Hyflux perps in 2016: MAS

DBS complied with rules as issue manager of Hyflux perps in 2016: MAS

Samantha Chiew
08/04/19, 12:21 pm

SINGAPORE (Apr 8): The Monetary Authority of Singapore says that its supervisory reviews to date have not uncovered any impropriety on the part of DBS when performing its roles as both issue manager and distributor of Hyflux perpetual securities in 2016.

See: Hyflux rescue bid by SMI falls through amid conflicting statements

The MAS spokesperson adds that DBS, in its capacity as the issue manager, has conducted its due diligence checks to ensure that material information relating to Hyflux was highlighted in the offering document.

“We note that Hyflux had disclosed in its offering document in 2016 that the Tuaspring power plant was expected to incur losses if electricity prices in Singapore were to remain low. The offering document was also cautious on the outlook for the water and energy markets,” says the MAS spokesperson.

In addition, DBS, in its capacity as a distributor of the securities, had complied with MAS’s requirements to configure its ATM screens to remind investors to read the disclosure documents before making their applications.

MAS was responding to an The Edge Singapore query on whether there was any impropriety on the part of DBS during as manager and distributor of Hyflux perpetual securities sold in 2016.

The proceeds of the 2016 issue were used to redeem older perps that were issued to accredited investors.

DBS was also the sole manager and book runner for both the 2011 tranche of preference shares and the retail tranche of perpetual securities.

Financial institutions who sold the perpetual securities have been criticised in the media for underplaying the financial risks of perps sold to unsophisticated CPF investors when the financial health of Hyflux had deteriorated in 2016 compared to 2014.

In its response, MAS says all investments come with risks, as seen in Hyflux’s financial situation leading to losses for investors.

Hence, MAS says it is working with the industry and other stakeholders to educate investors, via the national financial programme MoneySENSE, about the features and risks of the various investment products and encourage investors to seek financial advice if needed, as well as to diversify one’s investment portfolio.

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