OVER a billion units change hands efficiently on the Singapore Exchange every day, but trading of shares in a public but non-listed company can be more daunting and complex.
Shareholders wishing to exit Income Insurance (Income) are discovering this the hard way.
To raise competitiveness and capital-raising avenues to fund growth, NTUC Income Insurance Co-operative, was corporatised in 2022 to form Income Insurance.
Tough exit
But with the corporatisation, shareholders could no longer redeem their shares at par value of S$10 each. Instead, as part of the exercise, they received an equivalent number of Income shares on a one-for-one basis, and owners have to find their own buyers if they wish to liquidate their investments.
With no daily and open listing of buyers, sellers and bid and ask prices, finding a buyer could take months. To assist, Income tied up with Phillip Capital in January for the Income Insurance Share Liquidity Program.
Shares offered for sale are held in custody by local brokerage Phillip Securities, a unit of PhillipCapital, and made available on Alta Exchange, which counts PhillipCapital among its shareholders.
But only registered clients of Alta who are accredited investors and those of its member firm network can view Income share-trading data on the platform.
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Under Singapore law, to qualify as an accredited investor, an individual must have a minimum income of $300,000 in the last 12 months; or his net personal assets must exceed $2 million, of which the net value of his primary place of residence can contribute up to only $1 million; or his net financial assets must exceed $1 million.
Many income shareholders do not meet these criteria.
The first tranche of the programme was launched on Jan 11 this year and closed on Jan 27. Income shareholders were invited to transfer custody of their shares and submit sell orders to Phillip Securities during this period. On May 3, the brokerage reported that it executed over S$3.5 million worth of Income shares over the first tranche. Details of the initiative’s second tranche have yet to be announced.
No market data
With no available real-time data, it was also difficult for sellers to value their shares.
One could turn to Income’s net asset value (NAV) per share but this metric is only accurate at the time of publishing. The last known NAV provided by Income was S$29.55 as at end-December 2023, given in its first annual report as a public non-listed entity.
Investors may look out for valuation estimates issued by independent brokerages, though the timing of such releases may be infrequent. In Income’s case, the last publicly available per-share value projection was S$19.74, made by PhillipCapital in a January 2024 report.
All said, Income shareholders are in an unenviable situation.
