We have a portfolio management team overseeing the
various businesses in which we have stakes, who also serve
as an interface between Straits Trading and the various
companies in our portfolio. Our portfolio management
team consists of experienced professionals with deep
understanding of their respective portfolio companies and
the industries in which they operate.
WORKING WITH OUR PORTFOLIO COMPANIES
As an investment company, we do not intend to be just
passive investors. Rather, we view ourselves as a strategic
investor and a “thought partner” when engaging with our
portfolio companies. What makes such partnerships valuable
is the shared purpose at the heart of the working relationship
that serves to align the thinking of different organisations
around common goals and objectives. Our engagements
with our portfolio companies are an intentional, deliberate
and defined process to achieve optimal and mutually
beneficial outcomes through the execution of ideas, plans
and strategies. We take a keen interest in their strategies,
results and challenges and confer regularly with their
senior executives. In this manner, we see ourselves as
a key repository and conduit of intellectual capital and
professional expertise that our portfolio companies can tap
on. For example, we can add value through contributing
our expertise in capital raising, strategic development and
various other corporate actions.
In working with Straits Real Estate, Straits Trading goes
a step further to provide value-adding “shared services”
such as finance, information technology, human resources
and corporate communications that Straits Trading can
leverage upon.
FINANCIAL TRANSPARENCY
With Straits Trading’s transformation from an operating
company into an investment company, its business activities
now reflect contributions from subsidiaries and associates
like Straits Real Estate, ARA and Far East Hospitality. As we
progress, comparisons will become easier and there will
be greater clarity for investors. Over the next few years, we
anticipate that our results may fluctuate and be uneven as
we invest in our businesses and buttress their capabilities to
grow and expand. As our platforms grow, earnings should be
more stable and sustainable.
KEY DEVELOPMENTS DURING THE YEAR
Acquisition of units in Suntec REIT
In 2014, Straits Trading acquired Suntec REIT units as they
represented good value. As at December 2014, Straits
Trading owned approximately 4% of Suntec REIT. This
investment also strengthens Straits Trading’s real estate
ecosystem by giving it an interest in Suntec REIT which is
managed by ARA Trust Management (Suntec) Limited, a
wholly-owned subsidiary of ARA.
Redemption of Medium Term Notes
In July 2014, we successfully redeemed $225 million of
Medium Term Notes and refinanced it with lower cost
financing facilities. The refinancing further provides the
Company with greater financial flexibility.
Monetisation of Straits Trading Building
In December 2014, Straits Trading completed the sale of
Straits Trading Building to the Sun Venture Group for $450
million. The monetisation of STB is in line with the Group’s
strategy of redeploying its capital into potentially higher
returning real estate opportunities, through Straits Real Estate.
BUILDING UP OUR PLATFORMS OF GROWTH
During the course of the year, our various platforms continued
to build up their competencies and expand their businesses.
I will touch on some of the key developments but I would
like to add that the public-listed corporations in our portfolio
such as ARA and MSC provide their own financial disclosures
and reports, and it may be useful to refer to those for further
information on the respective companies.
Straits Real Estate Pte. Ltd. (“Straits Real Estate”)
In May 2014, Straits Real Estate committed US$80 million of
capital towards the ARA Summit Development Fund I L.P. as
the lead and anchor investor. The fund is mandated to invest
in real estate development projects with value enhancement
potential in Australia and South East Asia.
In December 2014, Straits Real Estate made its maiden
acquisition of a retail development in Chongqing, China, for
approximately RMB 668.4 million (approximately SGD141.6
million). Straits Real Estate will spend approximately RMB 100
7
THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
