Smart working from SMRT

Jan 15, 2018
Balancing best-in-class commuter services with good shareholder returns

Mini-profile taken from the Award-Winning IR – Asia 2017 report details why SMRT Corporation was the judges’ choice for the best IR during a corporate transaction award at the IR Magazine Awards – South East Asia 2017

SMRT has always faced a challenge of providing best-in-class commuter services and good shareholder returns. Over the years, its rail profits declined amid mounting capital expenditure and costs to improve rail reliability. To counter this, after five years of negotiations, the government announced SMRT’s transition to the New Rail Financing Framework (NRFF) in July 2016. The NRFF was a radical transformation of SMRT’s rail business to asset-light.

A day after the announcement, SMRT received a privatization offer from Temasek. SMRT had said that NRFF would put the company on a more sustainable financial footing so the challenge now was to convince sentimental shareholders why they should let go of the company at that juncture. The privatization technicalities were another hurdle.

SMRT developed a comprehensive engagement program using multiple touch points, including third-party advocates, to ensure shareholder concerns were addressed and investors understood the technicalities. This provided an avenue for SMRT to deliver messaging around long-term business risks and uncertainties. 

SMRT targeted briefings for remisiers (agents of a stockbroking company) from seven leading brokerage houses. The communications team also engaged key media outlets. This allowed SMRT to articulate its narrative for the future, demonstrating its commitment to improving rail service and reliability. The engagement strategy yielded excellent results, something the judges felt were significant. SMRT achieved unanimous support from equity analysts, advising shareholders to accept Temasek’s offer – a rarity in privatization proposals.

SMRT also achieved widespread press coverage, evidenced by more than 400 pieces of media coverage over the course of two and a half months. Most coverage was on message, addressed concerns and helped drum up shareholder support. The biggest success was the result of the transaction. The proposed privatization obtained significant affirmation, with 84.83 percent of shareholders approving the move. This equated to 92.89 percent of the shares represented at the meeting. The transaction made history in Singapore, with SMRT successfully delisted on October 31.

This has marked a new chapter in SMRT’s journey toward greater operational, engineering and service excellence as it retools and reinforces its core competencies to deliver safe and high-quality rail service for commuters.

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