More than 7 years ago, Sydney Yeung sank S$1.83 million into a low-profile listco then known as Giken Sakata.

Sydney 12.2017Sydney Yeung, 47, is also MD and sole shareholder of Roots Capital Asia, a private equity firm.
 NextInsight file photo
His investment via his 100%-owned Roots Capital garnered him a stake (currently 18.65%) in Giken Sakata through a placement of new Giken shares.

Mr Yeung was subsequently appointed CEO of Giken, a precision engineering business which went on to diversify into the oil & gas sector in Indonesia.

Renamed GSS Energy, it invested millions of dollars in the oil & gas venture but it hit several rough patches and has yet to turn in any revenue. 

Last week, Mr Yeung put in an unsolicited offer to buy over 100% of Giken Sakata, the subsidiary that meanwhile has picked up business pace.  

Stock price 

9.0 c

52-week range

7 – 13 c

Market cap

S$45 m

PE (ttm)

18.8x

Dividend yield 

--

Year-to-date 
return

-29%

Shares outstanding

497 m

Source: Bloomberg

Giken Sakata is a wholly-owned subsidiary of GSS Energy, which said it is "considering and formulating a response with respect to the Potential Transaction."

No definitive agreements have been entered into, no offer price was made, and there is no certainty that the Potential Transaction will be consummated.

The Potential Transaction, if undertaken and completed, is expected to constitute (i) an interested person transaction, and (ii) a major transaction.

Accordingly, the Potential Transaction, will be subject to:

batam11.17Giken Sakata factory in Batam. NextInsight file photo
(i) appointment of an independent valuer by the Company to provide a valuation on Giken Sakata;

(ii) appointment of an independent financial advisor by the Company; and

(iii) approval of the Shareholders to be obtained at an extraordinary general meeting.

Our thoughts:

1. If the transaction materialises, the cash consideration will be paid to the listco which would then be in a position to consider paying a special dividend to shareholders.

2. More clarity will be needed on the potential contribution of the oil & gas venture which would be the sole business left in the listco, unless a new business is injected. (For recent development, see: )

3. This is pure speculation but the odds are that Mr Yeung will seek to re-list Giken Sakata at an opportune time.

It would have to be a more profitable business than currently, a prospect which is likely.

Otherwise, why would Mr Yeung make an offer for it?

Giken Sakata is gaining new customers, embarking on new ventures, and expanding its manufacturing capacity through a second facility in Batam. 


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