Dividend mindset needs to give way to greater risk appetite

Rentier mentality could see investors and companies miss out on Covid-19 opportunities

Joan Ng

Published Tue, Aug 25, 2020 · 09:50 PM

THE S$0.65-a-share privatisation offer for Teckwah Industrial Corp by its three major shareholders comes at a good premium over Teckwah's all-time close of S$0.555.

But it also underscores the worrying trend of the Singapore market's fixation on cash returns.

The cash offer for Teckwah comes on the heels of an open letter from activist investor Quarz Capital Management to Teckwah's management and board. Bemoaning Teckwah's low share price return, Quarz had called on Teckwah to increase its dividend payout ratio to 80 per cent of net income from the historical average of 32 per cent since 2011.

It said Teckwah had "continuously emphasised the need to invest and retain a strong cash position" while at the same time paying the largest shareholder and his family members substantial compensation and dividends. Teckwah should also follow the trend among multinational…