F&N to Consider Property Business Spinoff to Increase Value

Fraser & Neave Ltd. may consider separating its property arm from its other businesses as it seeks to offer value to shareholders.

F&N, the 130-year-old real estate and beverage conglomerate, said it will appoint advisers to study options available for the company to “unlock shareholder value,” according to a statement dated yesterday to the Singapore stock exchange. “This may involve a segregation of its property-related businesses from its non-property related businesses,” Singapore-based F&N said.

The announcement follows the appointment of Thailand’s richest billionaire Charoen Sirivadhanabhakdi as company chairman in February, following his S$13.8 billion ($10.9 billion) takeover of F&N, whose businesses range from milk to shopping malls. It also comes amid new rules directing how financial institutions grant property loans to individuals as Singapore’s government extends efforts to curb speculation.

Charoen’s appointment became effective from Feb. 28 after he won control of F&N in January, when his offer of S$9.55 a share gained support from a majority of shareholders and edged out a proposal from rival Overseas Union Enterprise Ltd. F&N’s stock price has fallen 12 percent this year to close at S$8.58 yesterday.

In a separate exchange filing also dated yesterday, F&N said its proposal to distribute S$4.7 billion of capital to shareholders, amounting to S$3.28 per share, was approved.

Biggest Contributors

Charoen, who ranks 95th in Bloomberg’s Billionaires Index with an estimated net worth of $10.6 billion, gained access to F&N’s property assets after the deal. The company’s development and commercial property businesses were the biggest contributors to net income in the three months ended March 31, according to data compiled by Bloomberg.

Starting today, a new framework requires that lenders in Singapore take a borrower’s debt into consideration when granting property loans, the nation’s monetary authority said in a statement yesterday.

In January, the government unveiled a seventh round of measures to curb real-estate speculation in about four years that included an increase in stamp duties for home buyers by 5 percentage points to 7 percentage points. OUE said in a Jan. 21 statement it wouldn’t match Charoen’s offer for F&N, citing the property measures.

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