CFA Society Singapore
SINGAPORE (July 31): Billionaire former stockbroker Peter Lim is on his way to transforming Rowsley into a healthcare company — by injecting into the public-listed company assets that are already familiar to the market.
Before investors jump on the stock, however, they should look closely at the market value it has already garnered.
On July 18, Rowsley said it planned to acquire 100% of a privately held company called Sasteria, which Lim fully controls. Sasteria wholly owns Thomson Medical Pte Ltd, which in turn owns Thomson Medical Centre, a premium 190-bed healthcare facility that specialises in maternity care and fertility treatments.
Rowsley will pay $1.9 billion for Sasteria, by issuing 25.3 billion new shares at 7.5 cents each. This is 2.7% more than Rowsley’s last traded price of 7.3 cents prior to the announcement, but 13% less than Rowsley’s net asset value of 8.63 cents a share.
As part of the whole exercise, all existing shareholders will also receive two bonus warrants for every share they currently hold. The bonus warrants will have an exercise price of nine cents. Each bonus warrant will come with a “piggyback” warrant, with an exercise price of 12 cents.
Lim currently owns more than 45.3% of Rowsley. With the 25.3 billion shares to be issued for the purchase of Sasteria, Lim’s stake in the enlarged Rowsley will be more than 90%.
According to Rowsley, Lim is seeking a waiver of the obligation to make a mandatory offer for the company under the Takeover Code.
Rowsley did not say whether Lim planned to sell any of his shares to widen the free float.
Ng Ser Miang, chairman of Rowsley, says in a statement that the acquisition of Sasteria will “significantly increase” the company’s market capitalisation and market profile, and generate investor interest. Indeed, after the acquisition was announced, shares in Rowsley rocketed.
On July 20, they traded at as much as 19.8 cents, up 171% from before the acquisition of Sasteria was announced. Since then, the stock has retraced significantly, to close at 11 cents on Friday.
Is Rowsley getting a good deal, and are its shares getting too high? After all, buying the stock now for the healthcare acquisitions is akin to buying shares in a newly listed healthcare company after its shares have popped on the first few days of trading.
Find out more as we take a look into the group’s plan to buy $1.9 billion in healthcare assets, and what it means for investors, in this week’s issue of The Edge Singapore (Issue 790, week of Jul 31), available at newsstands, bookstores, gas stations and 7-11 outlets.