If you are not familiar with XMH -- with a history of over 60 years, XMH is an established diesel engine, propulsion and power generating solutions provider. It has a diverse customer base in the marine and industrial sectors across Asia,  particularly Indonesia.

The Tan family at XMH Holdings has bought out a Koh Boon Hwee-linked private equity firm's stake in XMH.

The purchase lifts their aggregate holding to 80.1%, and raises the question: Is this a prelude to a privatisation offer for the rest of the issued shares?

400 elvin tanElvin Tan Tin Yeow, 61, Chairman & CEO of XMH. That speculation arises in part also because XMH is on the SGX Watchlist and currently does not meet one criterion for staying listed. (For more, see: 
XMH: 4 months to go before expiry of watchlist extension. How now?

The Tan family's share purchase was carried out via a married deal that was consummated and announced on Thursday (31 Aug) before a 3-day weekend.

It involved all of the fund's 19.08% stake in XMH, or 20,917,018 shares.


In a sense it was a surprising exit by Credence Capital Fund II as XMH looks like it's on a recovery path. Unfortunately, the exit crystallised a hefty loss for Credence on its investment made 10 years ago.

The consideration of S$7,320,956 paid to Credence works out to 35 cents/share.

Incidentally, XMH's has an upcoming special dividend of 1.25 cents and a final dividend of 0.25 cents. The x-d date is 11 Sept. -- ie, from 11 Sept, the stock trades without entitlement to those FY23 dividends.  

Tan family 

Stake

Elvin Tan

49.14%

Tan Guat Lian

10.93%

Tan Seng Hee

7.34%

Tan Tum Beng

12.72%

Total

80.1%

The Credence-held shares were bought in idential amounts by 4 Tan family members.

Two of them are XMH chairman-cum-CEO Tan Tin Yeow, 61, and Executive Director Ms. Tan Guat Lian, 59. They are siblings.


The other sibling who bought was Tan Seng Hee, 62 (who is not employed by XMH).

The trio's father,
 Tan Tum Beng, also was a buyer. He is the founder of XMH and has long retired from the company.

What next? Perhaps there are 3 scenarios:

SCENARIO #1. Privatisation. It takes just another S$7 million or so for the Tans to acquire the rest of XMH which is in the hands of the public, assuming 35 cents a share.

SCENARIO #2. SGX, considering that XMH has reported 3 consecutive years of profits (see table below), may yet grant another extension for XMH to meet the criterion of an average daily market capitalisation of $40 million or more for a period of 6 months prior to the end of the extension application.

SGD’000

FY23

FY22

FY21

FY20

Revenue

128,679

71,886

64,197

53,964

Net profit

3,962

2,990

944

(10,935)



SCENARIO #3. XMH successfully exits the watchlist and plods on with as little liquidity as in recent years. Of course, its liquidity may yet improve dramatically if it is rerated by investors as its business continues to recover. Or it issues a pile of new shares.

 

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