ST Capital and Vickers Ballas are to merge after both posted large first-half losses.
Vickers Ballas, a regional broking outfit, slipped into the red by S$49.63 million (about HK$221.66 million) in the first six months to June 30, following an additional $61.9 million provisioning for doubtful debts.
ST Capital, the financial services arm of the state-owned Singapore Technologies group, yesterday reported a $30.99 million interim loss, far more than analysts had expected.
It has been badly stung by losses in Indonesia and Thailand over the past year.
Vickers Ballas managing director David Ban said: 'Given that all the stock markets in the region have been devastated and savaged, businesses like us need to look beyond just broking. We expect to see more consolidations in the market.' Goh Boon Seong, ST Capital deputy managing director, said: 'Our vision is to create a pan-Asian financial services group, with Singapore at its core.' Under the proposed deal, Vickers Ballas will make a takeover offer for all ST Capital's shares. Afterwards, Singapore Technologies will have a put option entitling it to a 40 per cent stake in Vickers Ballas.
Through share swaps, ST Capital would become a subsidiary of Vickers Ballas. However, Singapore Technologies would in turn become the largest shareholder in Vickers Ballas.
Vickers Ballas' other shareholders will see their holdings diluted. Citibank's stake would be cut to 12 per cent, and Ong Beng Seng and Peter Fu's combined holdings would shrink to about 14-15 per cent.