Thakral Corporation to Acquire Majority Stake in TIL Investments for S\$93.9 Million

Key Highlights from the Announcement

• Acquisition of 81.64% Stake: Thakral Corporation Ltd (TCL), through its wholly-owned subsidiary Paramount Investments Pte. Ltd. (PIPL), has entered into binding agreements to acquire an additional 81.64% stake in TIL Investments Private Limited (TIL) for approximately S\$93.90 million.
• Major Transaction: The deal is classified as a “major transaction” under SGX Listing Rules, with the consideration representing 61.48% of the Group’s net tangible assets (NTA) as of FY2024.
• Interested Person Transaction: The transaction is an interested person transaction, as the sellers are entities and individuals related to the controlling Thakral family.
• Consideration Structure: The purchase will be settled partly in cash (about S\$49.99 million) and partly by issuing 24,217,108 new TCL shares (worth about S\$43.91 million) at a 10% premium to the 20-day VWAP, subject to shareholder approval.
• Resulting Shareholding: Upon completion, PIPL will own 95.28% of TIL, with the remainder held by Platinum Healthcare (Pte.) Limited.
• Strategic Asset: TIL owns a 21-acre land parcel in Gurugram, India, with plans for a major mixed-use development including a hospital, residential, and commercial components, offering over 2.5 million sq ft of development potential.
• Financial Impact: The deal will increase TCL’s share capital and NTA per share, but is expected to lower earnings per share due to increased finance costs and share dilution.
• Valuation: Independent valuers (JLL and Savills) place the land value at about S\$113 million, supporting the consideration paid.
• Approval Requirements: The transaction requires approval from shareholders, the SGX, and other regulatory authorities. An EGM will be convened for this purpose.
• No Profit Guarantee: There are no profit guarantees or forecasts from the sellers.
• Long-Term Commitment: The new shares issued to Thakral Mauritius will be subject to a one-year moratorium.

Details Investors Should Know

Transaction Structure and Parties Involved

The acquisition is structured in three tranches:

• Tranche 1: Acquisition of 10,705,540 shares from Thakral Mauritius for S\$76.12 million (S\$49.99 million cash + S\$26.13 million in new TCL shares).
• Tranche 2: Acquisition of 2,500,000 shares from Thakral Mauritius for S\$17.77 million (fully in new TCL shares).
• Tranche 3: Acquisition of 1,320 shares from individual Thakral family members for S\$0.01 million (cash).

After completion, TCL’s total stake in TIL will rise to 95.28%.

Strategic Rationale

The acquisition is part of TCL’s broader strategy to expand its real estate portfolio into high-growth markets. India’s real estate sector, especially in cities like Gurugram, is experiencing strong demand due to economic growth, urbanization, and rising income levels. The Gurugram land is earmarked for a major mixed-use development, with a hospital as an anchor, and is expected to deliver attractive returns aligned with TCL’s long-term benchmarks.

Shareholder Implications

• Significant Related Party Transaction: As a transaction involving controlling shareholders and directors, the deal is subject to heightened scrutiny and requires approval by independent shareholders.
• Share Dilution: The issuance of 24,217,108 new shares will dilute existing shareholders, increasing TCL’s total share base by 19.3% to 149.7 million shares post-deal. TGL’s holding will rise to 60.05% of the enlarged share capital, reinforcing the Thakral family’s control.
• Financial Effects: The Group’s NTA per share is projected to increase from S\$1.28 to S\$1.37, but EPS is expected to drop from 22.53 cents to 16.44 cents due to increased borrowings and new share issuance.
• Gearing: TCL’s gearing will increase from 0.39x to 0.65x, assuming S\$70 million in new borrowings.
• Valuation Support: The acquisition price is underpinned by independent valuations and is in line with the appraised market value of the land asset.
• No Profit Guarantee: Investors should note that there are no profit guarantees from the sellers for this transaction.
• Regulatory Approvals: The deal is contingent on approvals from shareholders, relevant authorities, and the SGX.
• Moratorium: Shares issued to Thakral Mauritius will be subject to a one-year lock-up, aligning interests with minority shareholders over the near term.
• Shareholder Meeting: A circular will be issued in due course and an EGM convened for the necessary approvals. Shareholders should monitor for further updates.

Potential Price-Sensitive Factors

• This transaction constitutes a major expansion into the Indian real estate market, which could reshape TCL’s growth profile, risk exposure, and earnings mix.
• The deal involves significant related party interests, which could be scrutinized by minority shareholders and regulators.
• The dilution effect and increase in gearing may impact investor perception and valuation multiples.
• The project’s success is tied to India’s economic momentum and execution of the mixed-use development.
• The deal’s closure is subject to multiple regulatory and shareholder approvals; any delays or failure to secure approvals could impact the share price.

Conclusion

TCL’s proposed acquisition of a near-total stake in TIL Investments marks a bold strategic move into India’s real estate sector, backed by a high-value land asset and ambitious development plans. While the deal offers potential for long-term growth and income diversification, it also introduces greater leverage and share dilution. The transaction’s success will depend on project execution, the Indian property market outlook, and alignment of interests between the controlling family and minority shareholders. Investors should watch closely for the upcoming EGM and regulatory updates, as these will determine the deal’s completion and future prospects for TCL.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisors before making investment decisions. The author and publisher accept no liability for any losses incurred in connection with this article.

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