Peregrine's Singapore wing seen in trouble
Prema Viswanathan
SINGAPORE, January 13: Hard on the heels of the liquidation of Peregrine Investment Holdings in Hong Kong, which sent the Hang Seng Index into a spin on Tuesday, the banking and brokerage group's Singapore operations are facing the prospect of screeching to a halt.Although none of the senior executives this correspondent tried to contact was available for comment, the Peregrine management here reportedly has complied with the Monetary Authority of Singapore's directive to it on Saturday that it should stop trading. The company does not have a berth on the Singapore Stock Exchange. Unlike the Hong Kong parent company, which blew up owing to its heavy exposure to Indonesian debts, especially the well-connected Indonesian transport enterprise Steady Safe, its two Singapore subsidiaries, Peregrine Securities and Peregrine Capital, which were set up in 1989, are believed to be well managed. The equities arm, especially, is said to be profitable, but has had to go under, thanks to the reckless forays of its
parent company. Of the 100-plus Peregrine employees in Singapore, 85 worked for equities and the rest with its fixed-income and corporate-finance operations. Most bankers and credit analysts this correspondent spoke to felt that despite its meteoric rise to a high-profile niche in the Asian bond market, Peregrine had not honed its risk-management skills or hedged its loans adequately to become a really big long-term player. ``It was little wonder that it came crashing the minute the liquidity crisis in Indonesia reared its head,'' he says. Another analyst points to the strength of Peregrine -- its dominance in the Asian market -- as its weakness. ``It should have established a stronger presence in other markets like Europe and the U.S. Then it could have covered up some of its losses in this region with gains elsewhere.'' There is much talk about Peregrine's extensive exposure to China's "red chips", and how this might affect the performance of Chinese stocks on the Hong Kong exchange, even though Beijinghas vehemently denied that it will be affected much by the liquidation of the brokerage firm. There is little doubt that Peregrine had been rushing in where others in the business feared to tread. For instance, when Hongkong and Shanghai Banking Corporation refused to extend unhedged credit to Steady Safe's president and director, Jopie Widjaja, Peregrine was more than willing to help out the well-known Jakarta entrepreneur. Of course, one reason why Peregrine felt it was a risk worth taking was because Widjaja had managed recently to acquire over 20 per cent of listed Citra Marga Nusaphala Persada, the $2 billion toll-road operation headed by President Suharto's eldest daughter Siti Hardyanti Rukmana. In return for the acquisition, Rukmana was anointed `commissioner' -- or non-executive chairman -- of Steady Safe, but reportedly it was a sinecure position. According to sources, it was Widjaja who was pulling the strings, in the hope of turning Steady Safe into Indonesia's biggest transport
conglomerate within a couple of years.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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