A couple of institutional investors that are already significant shareholders of ComfortDelGro C52 have recently raised their respective stakes in the transport operator.
According to Bloomberg data, ComfortDelGro’s third-largest shareholder, Invesco, on Jan 29 acquired nearly 31.7 million shares on the open market, bringing its total stake to nearly 71.3 million, or 3.29%.
Assuming a Jan 29 closing price of $1.39, this implies Invesco spent a cool $44 million on purchasing the shares.
As Invesco’s stake is not above the 5% mark, there is no obligation to make a filing with the Singapore Exchange S68 .
On the same day, Silchester Institutional Investors, already ComfortDelGro’s largest shareholder, acquired on the open market over 1.97 million shares for $2.74 million, or $1.3891 each. This brings its total stake to 152.75 million shares, equivalent to 7.05%, up from 6.96%.
This follows an earlier round of buying on Dec 1 of 4 million shares at $1.2898 each.
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The company’s second-largest shareholder is Ameriprise Financial, which according to Bloomberg data, last acquired 402,400 shares on Nov 30, bringing its total to 114.6 million shares, or 5.29%.
When ComfortDelGro was established more than two decades ago, the Singapore Labour Foundation was the single largest shareholder with a stake of around 20% before divesting them via placement exercises.
Since then, ComfortDelGro’s shareholding has been rather fragmented, with asset managers taking turns to be the single-largest shareholder. Before Silchester, the Capital Group was at one point the largest shareholder. It no longer figures in the list of top shareholders.
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Silchester is a relatively low-profile global asset manager with offices in London and New York.
According to the Financial Times, Silchester was founded in 1994 by Stephen Butt, the former chief investment officer of Morgan Stanley’s international equity programme based in London. Butt was joined by other colleagues from Morgan Stanley including Michael Cowan and Bertrand Le Pan de Ligny.
In a report last September, Silchester is said to have an AUM of US$40.9 billion ($54.8 billion), making it one of the UK’s largest boutique asset managers.
As described by the firm on its website, it espouses value investing. According to FT, Silchester holds between 100 and 150 companies at any one point. It is also a major shareholder in its own rivals such as Man Group, GAM, Jupiter and Janus Henderson.
ComfortDelGro was badly hit during the pandemic when the movement of people was restricted although it has since steadily recovered. Under a new management team, the company has been actively looking out for new transport ventures in overseas markets such as Australia.
The most recent venture announced by ComfortDelGro was to operate and maintain the metro system of Stockholm for 11 years via a joint venture with the Go-Ahead Group. The deal was reportedly worth $5.1 billion.
The joint venture was picked over the previous operator, MTR Nordic, and another competing bid from a joint venture by SMRT and its French partner, Transdev Group. The Stockholm win marks ComfortDelGro’s third overseas rail operation contract after Auckland and Paris.
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Following the news, DBS Group Research is keeping its “buy” call and $1.67 target price for the stock. “We believe with this win in the pocket, it will improve its credibility as a global rail operator and in turn success in securing future rail contracts,” says DBS in its Jan 24 note.
DBS notes that Stockholm Metro is a profitable and stable business. While the current operator, MTR Nordic, reported negative ebitda in 2022, the losses were mostly from its other rail operations in Stockholm.
Assuming most of the profits came from the Stockholm Metro, low interest and depreciation costs and a 21% corporate tax rate, DBS estimates the joint venture could achieve between $2.7 million to $14.7 million pro-rated net earnings.
The contract starts next May, with annualised earnings at $4 million to $22.1 million.
Given ComfortDelGro’s 45% share ownership, DBS estimates the earnings contribution from this new venture to be between $1.2 million and $6.6 million, which represents about 0.5% to 2.8% of its coming FY2025 earnings estimate.
