http://www.straitstimes.com/archive/...rsify-20140326

COMPANIES

Teho to acquire developer Tiec in bid to diversify

Marine-based company aims to expand abroad after $12.3m deal

Published on Mar 26, 2014

By Tee Zhuo


RIGGING and mooring equipment company Teho International has taken a major step towards developing its regional property arm.

The company will acquire local developer Tiec Holdings from main shareholders Eric Cheng and Thanuja Thiagarajah for $12.3 million.

About $7.3 million will be paid in cash, with the remaining $5 million in Teho shares.

While it is still early days, Teho chief executive Lim See Hoe said on Monday that this would eventually make property development a second core business for the locally listed company.

The Tiec Holdings acquisition comes with $60.8 million worth of ongoing local projects, from cluster housing to the mixed residential-commercial development Urban Heritage in Balestier.

Mr Cheng remains optimistic about developments in the local property market for the next five years, predicting it will surge ahead.

However, Mr Lim is looking beyond Singapore and hopes to tap Mr Cheng's 12 years of experience in the overseas and local property markets to expand abroad.

Mr Lim told The Straits Times yesterday that the idea of diversification had been with him since the financial crisis, from which the shipping industry "has not really recovered".

While Teho had remained "resilient" through the crisis, he was worried about uncertain economic conditions.

It reported that net profit grew 6.8 per cent to $1.9 million for the six months to Dec 31 last year, over the same period a year earlier, while revenue rose 28.2 per cent to $28 million.

Mr Lim said the acquisition would help Teho "strengthen its wings" by reducing over-reliance on the company's main income stream and cushion the impact of economic uncertainties.

He acknowledged that Tiec differs from Teho's past acquisitions, which were more related toits main trade in marine products.

In November 2011, Teho acquired Finessco Systems, a marine and offshore equipment supplier, for $6.4 million.

More recently, it bought Seanly Technical Singapore, a trader of reverse osmosis desalination and water equipment used in ships, for $2.5 million in April last year.

But Mr Lim believes the company should not remain too entrenched and miss chances when "they knock on our door".

He also said he has not ruled out the possibility of further diversification.

"We should always keep an open mind, or we risk losing opportunities," he added.

Tiec majority shareholder Mr Cheng, who is also the chief executive of local property firm ECG Group, said Tiec had achieved annual double-digit profit growth since it started in April 2010.

He added that the acquisition would allow the firm to rely on Teho's financial and management experience as a listed company to bring it to the next stage of growth.

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