Silverlake Axis, a Singapore-listed technology solutions provider, has turned heads with its innovative privatisation strategy. The deal, spearheaded by founder Goh Peng Ooi and private equity firm Ikhlas Capital, leverages a unique dual-pricing structure that could inspire future corporate buyouts.
What Makes This Deal Unique?
The dual-pricing structure gave shareholders two options:
- Option 1: A straightforward 36 cents per share cash payout—a premium of 20% over the last traded price and 31.9% over the six- and 12-month volume-weighted average prices.
- Option 2: A combination of 30 cents cash upfront plus one redeemable preference share (RPS), mandatorily redeemed in five years for 18 cents. This structure provided a total payout of 48 cents, translating to an effective cost of 40 cents for the offeror when adjusted for time value.
This approach balanced immediate liquidity with deferred payouts, catering to varying shareholder expectations and generating strong participation.
The Result: A Landmark Privatisation Success
The offer achieved an acceptance level of 98.33%, surpassing the 90% threshold required for compulsory acquisition. Silverlake Axis will now delist from the Singapore Exchange, transitioning to full private ownership under Zezz-Ikhlas.
Goh expressed his satisfaction:
“We are delighted to have surpassed the demanding compulsory acquisition threshold. Silverlake will now fully transform its business and deliver revolutionary solutions for our customers.”
Why This Strategy Worked
- Appealing to Diverse Shareholders:
- Upfront Cash Seekers: Option 1 provided immediate liquidity with decent premiums.
- Growth-Oriented Investors: Option 2 attracted those seeking a higher total payout over time.
- Market Speculators: The dual-pricing model mobilised buyers to trade shares at premiums above 36 cents, betting on Option 2’s potential.
- Optimising Costs for the Offeror:
- By deferring part of the payout, Zezz-Ikhlas reduced the upfront financial burden while still offering competitive returns to shareholders.
- Liquidity Advantage:
- Silverlake’s historically low trading volumes—less than 0.04% of its total shares traded daily—added to the attractiveness of a guaranteed exit for shareholders.
Silverlake’s Financials: A Mixed Bag
Despite achieving record revenue of RM783.5 million in FY2024, net profit dropped 38.2% year-on-year to RM105.2 million due to project delays. The privatisation reflects the offerors’ belief that Silverlake’s market valuation didn’t fully capture its growth potential or intrinsic value.
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