Singapore Post (SingPost) is reversing its international expansion strategy by divesting its Australian businesses for A$1.02 billion (S$861 million) to Pacific Equity Partners, in a bold move to enhance shareholder value. This decision comes as the company confronts its “burning platform” challenge—a reference to its rapidly declining domestic mail business.
The “Burning Platform” Dilemma and Strategic Shift
SingPost retains its monopoly on domestic mail delivery, a privilege held for nearly two centuries, but structural declines have led the company to seek international growth. Over the past decade, SingPost expanded through overseas acquisitions, notably in Australia. However, these ventures failed to fully offset declining domestic revenues, leading to a drop in earnings and share price, which plunged from over $2 in 2015 to just above 40 cents recently.
Faced with a market that hasn’t fully recognized the value of its assets, SingPost is now pivoting its strategy. The company will seek shareholder approval at an extraordinary general meeting (EGM) on March 13 for the divestment, which would generate gross proceeds of A$775.9 million and a gain of approximately S$289.5 million.
Australia Business Divestment Details
SingPost’s Australian holdings include Freight Management Holdings (FMH), Border Express, and CouriersPlease. Australia has been its largest and fastest-growing segment, contributing 57.9% of the company’s total revenue of S$992.4 million in 1HFY2025. The Australian segment’s EBITDA rose from A$25.4 million in FY2021 to A$70.6 million in 9MFY2025, showing strong growth momentum.
However, SingPost Chairman Simon Israel admitted that despite this growth, the market never fully “bought into the story” of its Australian expansion. By selling its Australian businesses, SingPost aims to unlock value more quickly and reduce debt. Of the gross proceeds, A$362.1 million will be used to repay Australian dollar-denominated debt, which stood at A$614.8 million as of September 30, 2024.
Potential Special Dividend and Future Growth Plans
SingPost may pay a special dividend following the sale, though the amount will be disclosed after the company reports its FY2025 financial results in May. Analysts estimate a potential special dividend of up to 16 cents per share. However, some believe SingPost might allocate more funds to growth opportunities or debt reduction.
SingPost will now focus on growing its e-commerce logistics business, which is currently operating at full capacity. The company views e-commerce as a key growth driver and aims to reposition itself as a logistics and e-commerce hub in Singapore.
Leadership Transition and Strategic Outlook
The strategic shift coincides with leadership changes. SingPost is searching for a new CEO after the dismissal of Group CEO Vincent Phang and other senior executives in December 2024. Chairman Simon Israel emphasized that the search will commence after the EGM, once there is more clarity on the company’s strategic direction.
Comparisons with Local Giants and Privatisation Speculation
Market observers have drawn parallels between SingPost and other iconic Singapore companies, including SMRT and Singapore Press Holdings (SPH), both of which were delisted due to structural challenges. Speculation is rife about whether SingPost could also be privatised. However, Israel dismissed such talk, noting that a state takeover would be a government decision.
The Road Ahead
With the planned divestment, SingPost faces the challenge of finding a new growth engine. It plans to capitalise on the booming e-commerce logistics market, leveraging its fully occupied logistics hub in Tampines. The company is also exploring adjustments to its local postal services, including possible rate hikes, to improve profitability.
As SingPost navigates its strategic transformation, the market will closely watch how it balances shareholder returns with long-term growth initiatives. The EGM on March 13 will be a pivotal moment for the company’s future direction.
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