There are several ways that companies can grow their business.
They can engage in organic growth such as building a new factory or expanding their product lines.
Another option is to acquire other businesses to boost their capabilities or augment a specific division to make help it to grow faster.
Here are four Singapore stocks that recently announced acquisitions to help grow their revenue and profits.
Q&M Dental Group (SGX: QC7)
Q&M Dental owns the largest network of private dental clinics in Singapore with 107 such outlets around the island.
The group employs 270 dentists and more than 350 supporting staff and sees around 40,000 patient visits per month.
Q&M Dental also has dental clinics in Malaysia and is a substantial shareholder of Aoxin Q&M Dental Group (SGX: 1D4), a group that operates dental clinics and hospitals in China.
Earlier this month, management entered into a memorandum of understanding (MOU) to acquire the dental clinic business of Veritas.
Veritas operates a dental clinic business at 781 Bukit Timah Road and is 90% owned by Dr. Sebrina Binti Abdul Malik.
This proposed acquisition is in line with Q&M Dental’s plan to continue expanding its dental clinic presence in Singapore.
Dr. Sebrina will also enter into a service agreement with the group for a minimum term of 10 years.
Q&M Dental will fork out S$800,000 for the acquisition and the MOU also states that Vertias and Dr. Sebrina will have a profit guarantee of S$1.02 million from 1 September 2024 to 31 August 2032.
The net book value of Veritas for the fiscal year ending 31 Decemeber 2023 was S$203,486.
iFAST Corporation Limited (SGX: AIY)
iFAST is a financial technology company that operates a platform for the buying and selling of unit trusts, equities, and bonds.
As of 30 June 2024, the group’s assets under administration (AUA) stood at a record high of S$22.4 billion.
Last week, iFAST announced that it acquired 300,000 shares of iFAST Global Bank (iGB) for a consideration of £4 million in cash, representing a stake of 6.93% of the bank.
Following this acquisition, iGB has become a wholly-owned subsidiary of iFAST.
For its second quarter of 2024 (2Q 2024) earnings, iFAST expects iGB to become an important growth driver for the group in 2025 and beyond.
Customer deposits at iGB surged by 80.3% year on year to S$646.6 million for 2Q 2024, which contributed to a 265% year-on-year jump in net interest income of S$1.85 million for the quarter.
In early September, iGB introduced EzRemit, a cross-currency transfer service, for its digital personal banking (DPB) customers.
EzRemit allows DPB customers to transfer money affordably to more than 50 countries in over 25 currencies and facilitates transfers to international banks and over 50 e-wallets.
Digital Core REIT (SGX: DCRU)
Digital Core REIT, or DCR, is a data centre REIT with a portfolio of 10 data centres worth S$1.4 billion as of 30 June 2024.
Earlier this month, the REIT announced its intention to acquire an interest of between 0.2% to 40% of a Frankfurt data centre.
Based on current market conditions, the manager expects to acquire an interest of around 10% of this facility.
The Frankfurt data centre is 98.5% leased to a roster of blue-chip clients and has a remaining weighted average lease expiry of 5.8 years based on annualised rent.
DCR has an option to acquire up to an 89.9% interest in this facility.
The total acquisition cost is estimated at between US$1.1 million and US$213 million.
The manager believes that this acquisition will help DCR to achieve scale and diversification while improving the portfolio’s credit rating.
The purchase is also 1.7% accretive to distribution per unit assuming a 10% stake purchase.
The Frankfurt data centre also offers organic growth opportunities with embedded rent escalation clauses while limited new supply provides the chance for the manager to achieve positive rental reversions.
Sembcorp Industries (SGX: U96)
Sembcorp Industries, or SCI, is an energy and urban solutions provider with a balanced energy portfolio of 21.2 GW and urban development projects that span over 14,000 hectares across Asia.
Last week, SCI signed a sale and purchase agreement with ENGIE Global Developments B.V to acquire the latter’s 30% interest in Senoko Energy Pte Ltd.
Senoko Energy is a major supplier of electricity in Singapore and this proposed acquisition will be complementary to SCI’s current portfolio of energy assets.
The purchase will assist the utility giant to support Singapore’s energy transition while providing for energy security and resilience for Singapore.
The Energy Market Authority has reviewed this transaction and has no objections to this proposed acquisition.
The salient terms of this proposed acquisition will be announced in due course and is expected to complete by the fourth quarter of this year.
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Disclosure: Royston Yang owns shares of iFAST Corporation and Digital Core REIT.
