07.10.2014

Tat Hong may float China crane business

Singapore based Tat Hong has said that it is exploring a possible spin-off of part or all of its tower crane rental business in China via a listing on a reputable stock exchange.

The statement goes on to say: “The directors believe that the proposed listing would provide access to an additional source of funding to capitalise on growth opportunities for the capital-intensive Tower Crane Rental business in China and at the same time, increase the overall financial capacity and flexibility of the group to strengthen the growth of its other strategic business units in Asia and Australia and unlock shareholder value”.

The statement is quite clear that any flotation is subject to a number of approvals and even if all of those are obtained it may decide not to go ahead with the proposal. It has given no indication where it might list the business.

The tower crane business generated revenues of almost $20 million in the first quarter and is well on target to exceed $80 million for the full year.

Vertikal Comment

Tat Hong’s Chinese tower crane rental business has expanded rapidly in the past year or two, but given the size of the market and the fact that it will require constant investment to keep up with demand. This at the same time as many of the other areas that the company operates in are going through a slow-down and one can see why the sale of part or all of this business could be attractive.

The fact that the company has gone public with this news, is likely to flush-out possible buyers who have not already stated an interest in the business. A partial spin off could though be quite attractive if Tat Hong can retain a majority stake. Alternatively it might well turn into a joint venture?

Watch this space.