Introduction
This analysis of the LBO of Amtek Engineering Limited (“Amtek”) in 2007 is noteworthy, primarily because it is one of the more recent example in Singapore of a leverage buyout of a public company involving private equity players , and it showcases a example of how private equity firms typically restructure and streamline the acquired company, subsequently executing their exit strategy via an initial public offering. In this paper, I will first provide a background on the leverage buyout and privatization of Amtek in 2007. This will be followed by an elaboration on the strategic, operational and organizational restructuring measures implemented by the new owners. Lastly, we shall examine why the exit strategy through an IPO in 2010 was not well received by retail and institutional investors, resulting in a pullback of the targeted IPO proceeds and a languishing first-day stock price. Background
Amtek was founded in Singapore as Metaltek Engineering Private Limited in 1970. With a core business in precision metals engineering and metal stamping, Amtek was formed during Singapore’s rapid industrialisation period in the 1970s. In 1987, it was listed on the Stock Exchange of Singapore. As an engineering company that did not have an exciting business or product, Amtek was profitable but primarily stayed off investors’ radar for many years. On 22 May 2007, Metcomp Holdings, a private equity partnership between Britain's CVC Capital Partners Asia Pacific, Standard Chartered Private Equity Ltd, and two private investors launched a cash offer for all the remaining shares of Amtek that it did not already own. This was an interesting development, as the consortium had gradually and collectively owned 49% of Amtek, with each partner having progressively swept up shares through open market purchases, or by buying shares from individual substantial