Private equity firms in Singapore Technologies Engineering Ltd (SGX:S63) are its biggest bettors, and their bets paid off as stock gained 3.7% last week

Key Insights

• The considerable ownership by private equity firms in Singapore Technologies Engineering indicates that they collectively have a greater say in management and business strategy
• Temasek Holdings (Private) Limited owns 50% of the company
• 13% of Singapore Technologies Engineering is held by Institutions

A look at the shareholders of Singapore Technologies Engineering Ltd (SGX:S63) can tell us which group is most powerful. The group holding the most number of shares in the company, around 50% to be precise, is private equity firms. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, private equity firms benefitted the most after the company's market cap rose by S$431m last week.

In the chart below, we zoom in on the different ownership groups of Singapore Technologies Engineering.

View our latest analysis for Singapore Technologies Engineering

What Does The Institutional Ownership Tell Us About Singapore Technologies Engineering?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Singapore Technologies Engineering already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Singapore Technologies Engineering, (below). Of course, keep in mind that there are other factors to consider, too.

Singapore Technologies Engineering is not owned by hedge funds. Our data shows that Temasek Holdings (Private) Limited is the largest shareholder with 50% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 1.9% of the shares outstanding, followed by an ownership of 1.8% by the third-largest shareholder.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Singapore Technologies Engineering

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.

Our data suggests that insiders own under 1% of Singapore Technologies Engineering Ltd in their own names. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own S$57m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 36% stake in the company, and hence can't easily be ignored. 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

Private equity firms hold a 50% stake in Singapore Technologies Engineering. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Singapore Technologies Engineering has 2 warning signs we think you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.