Sembcorp Jumps Over 2%; Individual Investors Own 33% Shares of Sembcorp But Private Equity Firms Control 50%

Simply Wall St.
07/31

Key Insights

  • Sembcorp Industries' significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public

  • 50% of the company is held by a single shareholder (Temasek Holdings (Private) Limited)

  • 16% of Sembcorp Industries is held by Institutions

If you want to know who really controls Sembcorp Industries Ltd (SGX:U96), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private equity firms with 50% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And individual investors on the other hand have a 33% ownership in the company.

Let's delve deeper into each type of owner of Sembcorp Industries, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Sembcorp Industries?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Sembcorp Industries. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Sembcorp Industries' earnings history below. Of course, the future is what really matters.

Sembcorp Industries is not owned by hedge funds. The company's largest shareholder is Temasek Holdings (Private) Limited, with ownership of 50%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. For context, the second largest shareholder holds about 4.8% of the shares outstanding, followed by an ownership of 2.1% by the third-largest shareholder.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Sembcorp Industries

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can see that insiders own shares in Sembcorp Industries Ltd. The insiders have a meaningful stake worth S$153m. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 33% stake in Sembcorp Industries. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 50%, private equity firms could influence the Sembcorp Industries board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

SEMBCORP INDUSTRIES LTD jumps 2.23% at 10:57 am, July31.

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