Temasek could lose millions it pumped into ABC Learning

Shortly after raising its stake in an Australian education firm, Temasek Holdings is now watching its investment totter as ABC Learning Centres has suddenly gone into receivership.

The Brisbane-based company said that McGrath-Nicol has been appointed receiver while administrator Ferrier Hodgson will look into how to salvage the firm, which has failed to repay about A$850 million ($849 million) of bank loans. The news came just a day after ABC Learning — the world’s largest childcare operator — assured Australian parents and investors that it remained in talks with “key stakeholders to secure the future of the company’s operations”.

In February, Temasek raised its stake to about 14.7 per cent from an initial 12.3 per cent bought in May last year for A$402 million or A$7.30 per share. The Singapore investment firm had justified pumping in millions of dollars more, amid a sharp fall in ABC Learning’s half-year earnings, by saying its decision was based on “commercial considerations”.

At the time, other shareholders including American fund manager Lazard had also bumped up their stakes. Then in August, the stock was suspended at the last traded price of A$0.54. Now, investors may be left with nothing, according to the Australian media. The Sydney Morning Herald said ABC Learning’s 34,000 shareholders “will not receive anything, as only secured creditors will likely claw back some of their funds”.

From A$7.30 a share to now less than A$0.54, the idea of diversify investment sound logical but seems a failure. As all are linked to with one another, no matter how diversify investment is, the risk is still there. I guess more of our money were being loss. Lately, CPF has came out with this "risk-free" program - "The Safe Way To Grow Your Money" asking Citizen to either transfer money in CPF OA to SA account or to topup using cash.

Hope our CPF is not just an empty shell.