Temasek to acquire nearly 25% of AS Watson for US$5.7b
Print Edition
SINGAPORE state investor Temasek Holdings has agreed to buy almost a quarter of health and beauty retailer AS Watson for about US$5.7 billion in what would be its single biggest investment and one that would boost its exposure to Asia’s fast growing consumer sector.
The purchase of 24.9 percent of AS Watson, owned by Asia’s richest man Li Ka-shing, is part of Temasek’s aggressive reshaping of its US$170 billion portfolio to ensure higher returns.
The state investor’s returns have often lagged its own internal metric in recent years as it focused on blue chip stocks.
Li’s Hutchison Whampoa, which owns AS Watson, said in a statement yesterday that it would use part of the proceeds from the stake sale to pay a special dividend of HK$7 (90 US cents) per share to its shareholders.
Retail sector investments are seen as a way to profit from rising consumer spending in emerging Asian markets such as China and Indonesia. AS Watson’s business includes personal care stores which dominate the beauty and health market in China, a sector forecast to grow by around 40 percent to US$186 billion by 2015.
“The consumer retail sector is a good proxy to growing middle income populations and transforming economies,” Chia Song Hwee, head of Temasek’s investment group, said in a statement.
“This is very much part of our investment themes as we shape Temasek’s portfolio for the long term.”
Temasek has 24 consumer-related direct investments, according to Standard & Poor’s CapitalIQ database. They include China online education services company TutorGroup, global sourcing firm Li & Fung Ltd and Indonesia retail giant PT Matahari Putra Prima TBK.
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