SINGAPORE: Singapore Post (SingPost) has completed the sale of its Australian logistics business, Freight Management Holdings (FMH), to Australia-based private equity firm Pacific Equity Partners for A$1 billion (around S$845 million), the company announced on Thursday (Mar 27).
According to The Business Times, the sale brought in gross proceeds of around A$781.5 million, which was slightly above the earlier estimate of A$775.9 million.
SingPost recorded an estimated gain of S$289.5 million from the deal, delivering a return of around four times its initial A$93.6 million equity investment in FMH over four years, as per its bourse filing.
Part of the proceeds will go towards repaying a A$362.1 million loan that was taken to fund FMH’s acquisition.
SingPost’s board will later announce how much of the proceeds will be returned to shareholders as a special dividend.
With this divestment, SingPost Australia Investments and all its subsidiaries, including FMH, are no longer part of the group. SingPost mentioned that the sale will lead to a strategic reset, with its earnings now relying mainly on its postal and e-commerce logistics business in Singapore, its international e-commerce operations, and two well-performing non-core assets.
The company said that the successful sale, along with possible future divestments, will create “a significant cash pool” for the company.
It added that this will give SingPost the flexibility to reinvest in growth, reduce its debt, or return proceeds to shareholders, with the board ensuring these options align with shareholder interests.
Before the announcement, SingPost shares ended 1.7% or S$0.01 higher at S$0.585 on Thursday. /TISG