Deal focus: SingPost’s one-world e-commerce play

In response to a decline in traditional mail delivery, Singapore Post (SingPost) is transforming itself to a technology-driven business. Its recent acquisitions of two US-based companies reflect an ambition to be part of the global e-commerce market.

Last week, SingPost bought 96.3% of TradeGlobal from PE backer Bregal Sagemount for about S$236 million ($169 million). It came a few days after the acquisition of a 71.1% stake in logistics management platform Jagged Peak.

"Our objective is to find a solution what will enable Asian clients to expand globally and allow US companies to come to Asia in a seamless way," says Marcelo Wesseler, CEO of SingPost E-Commerce. "After the acquisitions, we will cover Asia Pacific and the US, which account for two thirds of the global e-commerce market."

TradeGlobal and Jagged Peak are complementary assets. The former provides one-stop e-commerce services from website design, content management, marketing and analytics, to fulfilment and logistics. It serves about 60 large premium consumer brands in fashion, beauty and lifestyle products, including Versace and Boss. The latter, meanwhile, specializes in technology solutions for managing offline warehouse facilities and logistics.

The two companies have leading positions in the US, and they are keen to attract more Asian clients. SingPost got to know TradeGlobal through its existing clients and technology providers. The presence of a private equity owner made it confident about the value of the asset, but the key factor was the two founders - Dave Cook and Dave Eckley - who set up the company in 2001. They will stay on as chairman and CEO after the acquisition.

"They have grown the business in a very sustainable manner. For example, they haven't really lost any big customers in the last 10 years," says Wesseler. "If their clients are very happy, that's one of the key requirements for creating a very profitable business."

SingPost generated S$919 million in revenue last year, up from S$821 million in 2013, while net profit dropped 18% year-on-year to S$158 million. However, for the quarter ended June 2015, revenue was up 20.7% year-on-year at S$255 million and net profit rose 16% to S$47 million. Performance was buoyed by e-commerce-related activity, which contributed the logistics division's gains in revenue and operating profit of 43.6% and 74.6%, respectively.

The company also has a more nascent retail and e-commerce division - it generated revenue of S$24.1 million for the quarter compared to S$140.1 million for logistics - but it is expected to grow in importance as a result of SingPost's alliance with second-largest shareholder Alibaba Group. Using TradeGlobal and Jagged Peak, the plan is to help traditional retailers go online by building individual e-commerce websites and managing offline distribution centers.

Meanwhile, SingPost's M&A spree will carry on, with the next target likely to be in Europe.

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• Topics
• Exits
• Southeast Asia
• North America
• Technology
• Exit
• Southeast Asia
• USA
• Trade sale
• Singapore
• Logistics
• TMT