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Trans-Cab halts IPO over rise in insurance premiums

SINGAPORE — Less than a day before applications were due to close for its initial public offering (IPO), taxi operator Trans-Cab yesterday abruptly called off plans to list on the mainboard, after it was belatedly informed by its insurer — following the launch of the IPO last week — that it would have to pay a sizeable amount in additional premiums.

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SINGAPORE — Less than a day before applications were due to close for its initial public offering (IPO), taxi operator Trans-Cab yesterday abruptly called off plans to list on the mainboard, after it was belatedly informed by its insurer — following the launch of the IPO last week — that it would have to pay a sizeable amount in additional premiums.

In a press release, Trans-Cab said it needed time to evaluate this new information holistically and would need to resubmit its financial numbers to regulators for the IPO.

“In the interest of investors, the company, on the advice of its professional advisers, deems it prudent not to proceed with the IPO at this juncture,” said Trans-Cab, which is the second-largest taxi operator here with a fleet of 4,700.

The firm launched its IPO last Wednesday, with 8.8 million shares available to the public at 68 cents a share. Together with 65 million shares taken by cornerstone investors and 94.2 million placement shares for institutional investors, the company had hoped to raise about S$100 million in the exercise.

Two days later, Trans-Cab was notified by its insurer that it would be billed additional insurance premiums of S$1.83 million, inclusive of goods and services tax. The sum is for additional premiums that kicked in because the cumulative number of accident claims against its taxi fleet exceeded a certain threshold between 2009 and 2012.

The operator said the figure was a preliminary estimate provided by the insurer and that it has not reviewed or accepted the amount. As its fiscal year ends on Dec 31, it said it intends to complete its full-year audit and review the situation before evaluating its options on whether to revive plans for an IPO.

Following the termination of the listing, applicants will be refunded fully by the close of trading on Thursday.

Previous news reports said Trans-Cab had planned to use the funds to expand its taxi business, as well as to diversify into new areas.

The operator posted a three-year after-tax profit growth of around 22 per cent — from S$24.3 million for the 2011 financial year to S$36.3 million for the 2013 financial year. For the first half of this year, it posted a profit of S$20.1 million.

Termination of IPOs is not common here and previous instances were mostly due to unfavourable market conditions.

International firms which have pulled the plug in the past six months or so include Samudra Energy, which owns oil and gas interests in Indonesia, and Korean mall operator Lotte Shopping. In October 2012, ARA Asset Management suspended the IPO of Dynasty Real Estate Investment Trust (REIT) — a Singaporean REIT backed by Hong Kong billionaire Li Ka-shing — until further notice after consulting its bankers.

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