Teos’ equity injection in Marco Polo about ‘investing in people’

The founding Teo family of Super Group views the $20 million equity injection into Marco Polo Marine as part of the business of “investing in people”, the heir to the family fortune told The Business Times last week.

Apricot, the private investment firm of the Teo family, is forking out a third of the $60 million rescue financing pledged by nine investors for Marco Polo. Marco Polo completed its months-long debt restructuring exercise recently, paving the way for this new equity to enter the financially troubled listed group. Apricot has emerged as the largest shareholder in Marco Polo with a 19.28 per cent deemed and direct interest.

The family office’s move however, has raised eyebrows. To begin with, offshore and marine (O&M) is not quite a regular cup of tea for the Teos, who built a fortune from grooming Singapore’s well-known instant beverage brand.

Also, despite having earned a place in Singapore’s O&M sector, Marco Polo is not quite the stock market darling that has been on the radar of most punters and investors.

But Mr Darren Teo, 34, who heads Apricot, explained that his family is building on a block of trust they have in Marco Polo chief executive Sean Lee. Mr Teo further pointed out that the family office is not really into chasing after the “multiples” or financial metrics typically used to justify investments.

For sure, Apricot’s investment in Marco Polo has to make good commercial sense. Mr Teo said the family is in fact, taking a contrarian view and trying to uncover gems in the oil and gas (O&G) sector, which he described as “having been well-loved before but now unloved”.

Simply put, the family believes that looking beyond the current downturn, oil shall co-exist with renewables and remain an important element of the world’s energy mix. So the Teos are eyeing entry into the O&G-related play with the acquisition at a good bargain of Marco Polo’s assets, comprising a young fleet and a good-sized shipyard.

Beyond that, what sets Apricot apart from many others is its long-term investment view, Mr Teo said. Having divested their stake in the Super Group before setting up the family office, the Teos now prefer to take a back seat from the day-to-day operations of the investment targets. Naturally, it follows with this mandate that the family office would focus on the calibre of the incumbent management team when sizing up target companies.

…what sets Apricot apart from many others is its long-term investment view, Mr Teo said. Having divested their stake in the Super Group before setting up the family office, the Teos now prefer to take a back seat from the day-to-day operations of the investment targets. Naturally, it follows with this mandate that the family office would focus on the calibre of the incumbent management team when sizing up target companies.

As it turns out, this is precisely where Marco Polo manages to stand out from the rest of the pack. It certainly helps, as Mr Teo mentioned, that he counts Mr Lee, 40, as a childhood friend.

More importantly, Mr Lee has earned the trust and confidence of the Teos and eight other investors behind the $60 million rescue financing by persevering with debt restructuring instead of throwing in the towel as many in the troubled O&M sector has done before him. Mr Teo argued that in this respect, Mr Lee deserves a pat on his back for “weathering great adversity”.

While not a paltry amount, the Teos’ investment is a digestible sum in the context of what they would have received as major shareholders when the Super Group was sold for $1.45 billion last year.

The nine investors have thus decided to retain Mr Lee and the existing management team on board the revamped Marco Polo. Apricot will take on a non-executive board seat from March 1. Post-revamp, Marco Polo’s debt pile has shrunk to just $12 million, from $258 million previously. Mr Lee said the group now has $15 million in free cash flow, excluding accounts receivables.

One of the immediate priorities is to reactivate the vessels on its fleet now that they have been freed from vessel arrest risks after the Indonesian court sanctioned Marco Polo’s debt revamp.