Temasek offers $1.2b to privatise SMRT to prepare for difficult transition to new rail model

The buyout will be for $1.68 per share.

Aiming to focus on smoothing out its transition to the new rail financing model, Temasek has offered to buyout all SMRT shares.

According to a press release by Temasek, privatisation will provide SMRT with greater flexibility to focus on its primary role of delivering safe and high quality rail service, without short term pressures of being a listed company.

Even under the new framework, Temasek said SMRT is expected to face challenges with costs and uncertainties associated with an ageing and expanded network.

“SMRT will also need to focus on delivering on existing and new multi-year programmes to support an ageing and expanded network, including the need to deliver a higher order of rail reliability and service in line with the heightened Maintenance Performance Standards to be determined by the LTA,” Temasek said.

Additionally, privatisation will also allow minority shareholders to monetise their holdings and avoid the uncertainties of the transition, as well as remove all costs and distractions associated with the Company’s listing requirements, including quarterly reporting.

Meanwhile, the directors of SMRT have appointed Merrill Lynch Singapore as financial adviser to advise on the terms of the acquisition.

Koh Yong Guan, SMRT chairman, said the company will continue to face significant risks.

“We do not have any control over fare increases and ridership growth – two key revenue drivers for SMRT Trains,” he said.