(Oct 30): Desmond Kuek, CEO of SMRT Corp, worked hard last year to persuade shareholders of the company to accept an offer from Temasek Holdings to take the company private via a scheme of arrangement. SMRT’s business, he said, needed a restructuring that was best done away from the glare of the public market. “The privatisation allows an environment where this can be focused on much more decisively and allows us to bring about those changes in a more determined way, without the short-term pressures of earnings expectations,” Kuek said in an interview with The Edge Singapore in September last year.

Days before the scheme of arrangement was unveiled, SMRT had also announced the transition of its rail business to a new rail financing framework. The NRFF mitigates the revenue and earnings risk for SMRT, through a risk-sharing mechanism with the Land Transport Authority. However, LTA’s sharing of the downside risk is limited. At the same time, the NRFF caps SMRT’s earnings potential from the rail business. Together, the introduction of the NRFF and the privatisation of SMRT were supposed to be good for commuters as well as investors. As it happened, shareholders of SMRT accepted the offer from Temasek, and the company was taken private on Oct 31.

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