Standard Chartered urged to re-purchase holding in Singapore firm it had sold off a year ago
Standard Chartered Plc, the lender trying to wind down its private-equity unit, faces pressure from two of the world’s biggest asset managers to buy back the stake in a Singaporean food company it sold them less than a year ago, people familiar with the matter said.
Blackstone Group LP and LGT Capital Partners AG spent about US$50 million last July buying 60 per cent of Phoon Huat & Co. from Standard Chartered Private Equity, or SCPE, the people said. Now the firms want their money back after the bank dismissed two top executives who were managing the investment, triggering a so-called key-man clause, and announced it wanted to exit most of its deals, one of the people said.
The skirmish may add to the bank’s burden from SCPE, which lost hundreds of millions of dollars on souring investments across emerging markets before Chief Executive Officer Bill Winters decided to wind it down in November, and shows how the impact of that decision will be complex. The business manages about US$3 billion for third-party investors alongside the bank’s own cash and many of those deals were also arranged with key-man provisions, according to two of the people, who requested anonymity as the matter isn’t public.
A representative for Phoon Huat in Singapore didn’t immediately respond to requests for comment. Officials for LGT and Blackstone declined to comment.
“As a non-strategic business, the group will exit Principal Finance over time,” Shaun Gamble, a spokesman for Standard Chartered in London, said by email, referring to SCPE. He declined to comment specifically on Phoon Huat. The lender intends to pull back from private equity “by streamlining the business over time and managing its third party investor portfolio to maximise value,” he said.
While the deal is too small to make much of a dent in any of the firms’ balance sheets, there are important client relationships involved for Standard Chartered.
Blackstone is the world’s biggest private-equity company and manages about US$368 billion across the globe, while LGT is owned by the Princely House of Liechtenstein and manages about US$50 billion, according to the firms’ websites.
Phoon Huat, founded by the Wong family, sells baking ingredients such as pie fillings and confectioners’ sugar. The company also runs about a dozen retail outlets in Singapore selling supplies such as cookie sheets and cupcake liners, and offers classes teaching amateur bakers how to decorate cakes and create the perfect bread loaf, its website shows.