Singapore Press Holdings (SPH)

[mobo]

sometimes I really dunno why SPH and singtel keep overpaying for online business that are making losses or are not so profitable

example sph's purchase of sgcarmart for 60mil
singtel's purchase of hungrygowhere for 12mil

I think at the end of the year its the young entrepreneurs that sold out that's laughing their way to the bank ^^

I suspect it is a direction from the top for them to model after venture capital modus operandi, i.e. buy as many promising start ups as you can and hope to strike that 1 or 2 correct ones to turn the overall portfolio profitable. These successful survivors can then be developed full fledged and integrated into the Group as a future growth driver.

Two main problems with this approach though:

1) The guys who are running the VC show (Allen Lew / Alan Chan and their Board of Directors) are typical corporate managers cum bureaucrats. Their experience, character and business expertise is very different from VC fund managers.

2) Because this VC thing is more like an offshoot adventure of an established cash cow business, they are serverly restricted in the type of companies they can pursue, i.e. it must be from industry adjacencies and able to "synergize" with the existing Group. This curtails much of the flexibility and competitive edge enjoyed by other VC funds.

IMO, SPH does not follow the approach of VC. VC invests in start-up while it is still cheap, rather than already successful one e.g. sgcarmart which costs tenth of million.

SG carmart is a startup by corporate standards and $60mil is considered small enterprise by Singapore standards I think. Many silicon valley startups are well capitalised in the region of tens of millions as well.

If you look at the life cycle of a typical business, SG carmart is still in its infantile stage. There is much more potential than what it is now, a simple website providing car-related info to Singapore users.

Whether it will be able to fulfil its potential is another different story, I'm very sceptical though, knowing the profile of SPH's senior management team and the way their BOD thinks.